7th Pay Commission HRA: As per the recommendations of the 7th Pay Commission, the Center has recently announced a 4% increase in the drought allowance of central government employees and pensioners. With this increase, DA of employees has increased to 50 percent. However, no announcement has been made from the Center on the HRA to be increased accordingly.
7th Pay Commission HRA: It is known that the government has increased the drought allowance (DA hike) of government employees to 50 percent. It came into effect from January 1, 2024. Although there is no problem in that regard, there is some uncertainty and confusion regarding the HRA which has to be increased accordingly. Generally, along with the DA hike, the House Rent Allowance (HRA) also increases.
Are special orders required?
However, the government has not issued any special order or notification regarding the 7th Pay Commission HRA amendment. But, does that require a separate notification? Will HRA increase automatically along with DA hike? Questions are now arising. Regarding the special 7th Pay Commission HRA notification by the government, according to the finance ministry memorandum, another government notification on HRA increase may not be necessary and this amendment can be directly implemented, said Sanjeev Kumar, Partner, Luthra and Luthra Law Offices India.
Depending on the level of the city..
One thing to note is that HRA depends on the city where the employee resides. These are divided into X, Y and Z cities. Z category city will get the least increase. According to the 7th Pay Commission rules, the HRA rates have to be revised city wise for X category city by 30 percent, Y category city by 20 percent and Z category city by 10 percent. It is expected that this division will be in the salary slip of the employees.
DA Increase 4%
In the month of March, the government has announced to increase DA by 4% for employees and DR by 4% for pensioners. With that, this amount has increased from 46 percent to 50 percent. With this increase, 49.18 lakh employees and 67.95 lakh pensioners will be benefited and the government will be burdened with Rs.12,868.72 crore annually.
HRA calculations with DA increase..
On July 1, 2017, HRA for cities X, Y and Z was fixed at 24%, 16% and 8% respectively. After that when DA reached 25%, HRA rates increased to 27%, 18% and 9% for cities X, Y and Z respectively. Hence, Rs. 35,000 for a central government employee drawing a basic salary of HRA as follows.
a) For X Category City: Rs. 35,000 at 27% = Rs. 9,450
b) For Y Category City: Rs. 35,000 at 18% = Rs. 6,300
c) For Z Category City: Rs. 35,000 at 9% = Rs. 3,150
Now, with DA reaching 50 percent, Type X City will get 30% HRA, Type Y City 20% and Type Z City 10% as per HRA rates recommended by the 7th Pay Commission.
So, Rs. 35,000 the revised HRA amounts for employees drawing basic pay will be as follows:
a) For X Category City: Rs. 30% of 35,000 = Rs. 10,500
b) For Y Category City: Rs. 35,000 at 20% = Rs. 7,000
c) For Z Category City: Rs. 35,000 at 10% = Rs. 3,500.
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