7th Pay Commission: We calculate why your HRA may not increase to 157% immediately

After over a year of waiting, 50 lakh government employees finally have something to cheer as Prime Minister Narendra Modi led Union Cabinet last month accepted all 7th Pay Commission recommendations, including House Rent Allowance (HRA) and Dearness Allowance (DA), with some modifications. 

Cabinet said that 7th Pay Commission recommendations are being accepted with 34 modifications. 

However, the HRA has been increased between 106% to 157% under the modifications accepted as part of 7th Pay Commission.

What this means is that employees belonging to the highest pay level will get HRA of Rs 33,000 from July 2017 as their HRA component has risen from Rs 27,000 to Rs 60,000. 

However, the HRA of these employees will be increased by Rs 40,500 to 67,500 and by Rs 48,000 to Rs 75,000 when DA crosses 25% and 50% respectively, Zeenews reported. 

What this means is that employees will not get theri 157% rise in HRA until DA crossed 50%.

"HRA is currently paid @ 30% for X (population of 50 lakh & above), 20% for Y (5 to 50 lakh) and 10% for Z (below 5 lakh) category of cities. 7th CPC has recommended reduction in the existing rates to 24 % for X, 16 % for Y and 8 % for Z category of cities," the government said in a statement.

"As the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA shall not be less than Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y and Z category of cities respectively. This floor rate has been calculated @ 30%, 20% and 10% of the minimum pay of Rs 18,000. This will benefit more than 7.5 lakh employees belonging to Levels 1 to 3," it added.

Zeenews further said, "As the Cabinet has accepted the recommendations of A K Mathur-led 7th Pay Commission on allowances so the HRA component of central government employees will increase ranging between 122% and 157%.

Take, for instance, a central government employee at the very bottom of the pay scale, where the basic pay (pay of pay band + grade pay) is now Rs 7,000, would currently be entitled to an HRA of Rs 2,100 in a Class X city. As per 7th Pay Commission, the new entry level pay at this level is Rs 18,000 per month against which the new HRA for a Class X city would be Rs 5,400 per month, that is 157% more than the existing level, the report said. 

At the highest level of the pay scale, current HRA of Rs 27,000 would currently increase to Rs 60,000, meaning a hike of 122%.