House rent allowance is for salaried individuals who live in rented houses, and is for expenses related to accommodation, and it is divided into three categories — X, Y and Z
7th Pay Commission: In good news for central government employees, the government is likely to increase HRA (house rent allowance) by 3 per cent soon, according to reports. The HRA was previously revised in July 2021.
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After the HRA hike, government employees’ salaries will see a hike in their in-hand salary. HRA is given based on the city in which the government employees work. House rent allowance is for salaried individuals who live in rented houses, and is for expenses related to accommodation. It is divided into three categories — X, Y and Z.
(i) ‘X’ is for areas with a population of 50 lakh and more. As recommended by the 7th Central Pay Commission (CPC), HRA is given at 24 per cent.
(ii) ‘Y’ is for regions with population between 5 lakh and 50 lakh. It is given at 16 per cent.
(iii) ‘Z’ is given where the population is below 5 lakh. It is given at 8 per cent.
According to the Department of Expenditure’s memorandum, “the rates of HRA will be revised to 27 per cent, 18 per cent, 9 per cent for X, Y & Z class cities, respectively, when dearness allowance (DA) crosses 25 per cent and further revised to 30 per cent, 20 per cent and 10 per cent when DA crosses 50 per cent.
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In January, the finance ministry updated the house rent allowance (HRA) rules for central government employees under the 7th Pay Commission and said they will not be entitled to HRA in cases where:
(i) He/ she shares government accommodation allotted to another government servant; or
(ii) He/she resides in accommodation allotted to his/her parents/ son/ daughter by the central government, state government, an autonomous public undertaking or semi-government organisation such as a municipality, port trust, nationalised banks, Life Insurance Corporation of India, etc; or
(iii) His/ her spouse has been allotted accommodation at the same station by the central government/ state government/ autonomous public undertaking/ semi-government organisation such as municipality, port trust, etc., whether he/she resides in that accommodation or he/she resides separately in accommodation rented by him/her.
