May 012016
 

7th Pay Commission House Rent Allowance | HRA Rules | HRA for Center State Gov Employee 

The 7th pay commission brought about a lot of changes within the pay structure and allowances offered by the government. The percentage of house rents allowance that is given by government is now reduced to a considerable extent for all category central government employees. The present rate of HRA is offered as 24%, 16% and 8% accordingly on the class X, Y and Z cities. Well, it cannot be denied that HRA is one of the most important factors of the overall allowances received by government employees. It is provided to the employees as a compensation who are living in rented houses. But that does not mean HRA shall not be applicable for the employees living in their own houses. The HRA is allowed even if a government employee lives in his/her own house.

7th pay commission HRA house rent allowance State Centre Gov

  • Why does the government offer HRA?

  • With the house rent allowance facility, central pay commission encouraged the property owners for renting the properties and also reduce the shortage of dwellings. Apart from the basic salary, a major portion of the employee’s salary is house rent and there is going to be some changes in that category.
  • Instead of the existing 3 categories for the house rent, there will be four categories made this time and the major X class cities like Bangalore, Chennai, Ahmadabad, Hyderabad, Mumbai, Pune and Kolkata where employees were getting 30% above their basic salary as HRA.
  • The employees who are posted at the Y class cities, covers more than 90 stations, they were receiving 30% of the basic salary instead of 20%. In other areas the house rent allowance were 10% of the basic pay that is the existing rate of HRA of the Z category cities.
  • The qualifying threshold

The present qualifying threshold for the overall population for HRA is 50 Lakh for the X class cities, 5-50 lakh for the Y category cities and below 5 lakh for the Z category cities. The salary bill of government employees is going to rise by 9.56% after the implementation of recommendations made by 7th pay commission.

The major question

  • Now the question that has come up is, how does the DA component is rising so drastically if the rates of HRA come down? The solution to this problem is within the HRA calculation itself. While the overall emoluments of the government employees are going to rise by 23.5%, their basic pay shall also rise by two and half times more. Thus attaining a smaller fraction of the higher basic pay as HRA yields over the current levels of allowance.
  • For instance, let us take an example. An employee at the lowest level or grade pay attains 7000 INR and he/she would be currently entitled for an HRA of 2100 INR in a class X city The new entry pay becomes 18000 INR and new HRA thus becomes 4320 INR, and this is 106% more than the present level. The same proportions shall be applicable for class Y and class Z cities.

A tabular overview of different factors of HRA House Rent Allowance 

SL NO Factors about HRA Brief details
1. What factors to satisfy for claiming HRA? In order to claim the HRA, the employee should have specifically mentioned salary package that includes House rent.

If the employee stays in a rented house, to claim house rent, the rent should be 10% more than the salary.

Similar criteria for employee staying in self owned house where the house tax should be 10% more tan salary.

 

2. Who can claim rent? An employee can claim rent that was given to their parents.

But one cannot claim rent that is paid to their spouse.

3. How the is DA component so high is HRA rates come down? With the overall emoluments of the government employees, it is going to rise by 23.5%, and this in turn, will also increase the basic pay by two and half times more. It is this reason why attaining a smaller amount of the higher basic pay by HRA will yield over present levels of allowance.

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