Published On: Fri, Jul 7th, 2017

7th Pay Commission: Centre notifies higher allowances

New Delhi: The Centre today notified higher allowances for its 4.8 million employees and 5.2 million pensioners, in a bid to ease the inflationary pressure.

FM Arun Jaitley

FM Arun Jaitley

The government has published higher allowances resolution in the Gazette of India. The revised rates of the allowances shall come into effect from 1st July 2017 and shall affect more than 48 lakh central government employees.

For most of the allowances that were retained, the 7th Pay Commission recommended a raise commensurate with inflation as reflected in the rates of Dearness Allowance (DA). Accordingly, fully DA-indexed allowances such as Transport Allowance were not given any raise.

Allowances not indexed to DA were raised by a factor of 2.25 and the partially indexed ones by a factor of 1.5. The quantum of allowances paid as a percentage of pay was rationalised by a factor of 0.8.

As far as House Rent Allowance (HRA) is concerned, the recommendations of the 7th CPC were retained and HRA was rationalised by a factor of 0.8.

HRA Table

The Pay Commission had recommended reduction in the HRA rates to 24 per cent for X, 16 per cent for Y and 8 per cent for Z category of cities.

House Rent Allowance (HRA) is currently paid at 30 per cent for X (population of 50 lakh and above), 20 per cent for Y (5-50 lakh) and 10 per cent for Z (below 5 lakh) category of cities.

The government felt that the HRA at the lower suggested rates may not be enough for employees in lower pay brackets. Consequently, the government decided that HRA shall not be less than Rs 5400, Rs 3600 and Rs 1800 for X, Y and Z category of cities respectively. This floor rate has been calculated at 30%, 20% and 10% of the minimum pay of Rs 18000. This will increase payouts to more than 7.5 lakh employees across Levels 1 to 3.

The Pay Commission had also recommended that HRA rates should 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%. However, the Government has been more generous and decided that these rates will be revised upwards earlier i.e. when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA.

The resolution can be seen here.

Read Also: 7th Pay Commission: Centre likely to notify higher allowances today


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