8th Pay Commission House Rent Allowance --Check What HRA Central Govt Employees Got Entitled Under 7th Pay Commission

The Union cabinet led by Prime Minister Narendra Modi on 16 January 2025 approved setting up the 8th Pay Commission to revise salaries of nearly 50 lakh central government employees and allowances of 65 lakh pensioners. The 8th Pay Commission is also expected to make recommendations on house rent allowance (HRA) for the cental government employees. Here's a brief look at HRA being recommended by the 7th Pay Commission, and the Cabinet approval that followed thereafter.

Central government employees started getting HRA (House Rent Allowance) hike in range of 106 percent to 157 percent from July, 2017 salaries after the Union Cabinet chaired by the Prime Minister Narendra Modi in the same month had approved the recommendations of the 7th CPC on allowances with some modifications.

 

While approving the recommendations of the 7th CPC on 29th June, 2016, the Cabinet had decided to set up the Committee on Allowances (CoA) in view of substantial changes in the existing provisions and a number of representations received. The modifications were based on suggestions made by the CoA in its Report submitted to Finance Minister on 27th April, 2017 and the Empowered Committee of Secretaries set up to screen the recommendations of 7th CPC.

 

As per recommendation of AK Mathur Panel

Population of City              DA above Present Proposed 50% 100% Above 50 lakh (Class X) 30% 24% 27% 30% 5 lakh to 50 lakh (Class Y) 20% 16% 18% 20% Below 5 lakh (Class Z) 10% 8% 9% 10%

The modifications are based on suggestions made by the CoA in its Report submitted to Finance Minister on 27th April, 2017 and the Empowered Committee of Secretaries set up to screen the recommendations of 7th CPC.

"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 percent for X, 16 percent for Y and 8 percent for Z category of cities," the government had 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.

"7th CPC had also recommended that HRA rates will be revised upwards in two phases to 27%, 18% and 9% when DA crosses 50% and to 30%, 20% and 10% when DA crosses 100%. Keeping in view the current inflation trends, the Government has decided that these rates will be revised upwards when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA," it said.

As per modification in AK Mathur recommendation, cleared by Union Cabinet

Population of City              DA above Present Proposed 25% 50% Above 50 lakh (Class X) 30% 24% 27% 30% 5 lakh to 50 lakh (Class Y) 20% 16% 18% 20% Below 5 lakh (Class Z) 10% 8% 9% 10%

 

 

The Cabinet in 2017 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 percent and 157 percent.

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 percent more than the existing level.

 

Similarly, at the highest level of the pay scale, the Cabinet Secretary and officers of the same rank have a basic pay of Rs 90,000, which means they are entitled to current HRA of Rs 27,000 in Class X towns. After the revised pay scale, the new basic pay is Rs 2.5 lakh, for which the HRA would be Rs 60,000, meaning a hike of 122 percent.