How to calculate your HRA based on 5 simple points
It was a big gift for more than 48 lakh central government employees when the Union Cabinet on June 28 approved recommendations of 7th Central Pay Commission. The increased allowances, which comes into effect from July 1, 2017, is based on the recommendations of the Committee on Allowances (CoA). Briefing the media after the Cabinet meeting, Finance Minister Arun Jaitley said the modifications are based on suggestions made by the CoA in its report submitted to the Finance Minister on April 27, and the Empowered Committee of Secretaries set up to screen the recommendations of the 7th Pay Commission. Now, all the government employees are eager to know what amount of HRA allowance they will actually get based on their city.
Here are the simple steps to calculate you HRA:
– HRA is currently paid at 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
– 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 ₹5400, ₹3600 and ₹1800 for X, Y and Z category of cities respectively
– This floor rate has been calculated @ 30%, 20% and 10% of the minimum pay of ₹18000; this will benefit more than 7.5 lakh employees belonging to Levels 1 to 3.
– 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.
The Union Cabinet chaired by the Prime Minister Narendra Modi 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 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.
(All details and data cited in this article as per information given in Press Information Bureau release)