8th Pay Commission : Big news for central employees. As Diwali approaches, matters like salary, allowances, and bonuses become topics of discussion among employees. The current topic of discussion among government employees is the 8th Pay Commission. Every employee wants to know the fitment factor, how much the basic salary will increase, and how much allowances will increase. Basic salary is determined by the fitment factor, which is said to be 1.92, 2.86, or something in between.
Allowances like DA and HRA are determined based on the basic salary. It is being said that this time DA (Dearness Allowance) will be adjusted in the basic salary. However, House Rent Allowance (HRA) will be determined according to the old formula.
How is the rate of HRA decided?
House Rent Allowance (HRA) is a significant component of the salary of central government employees. Its rate is set to cover a certain portion of the rental expense. The HRA rate depends on the city category. For example,
27% for Category X (Metropolitan cities)
18% for Y category (medium cities)
9% for Z category (small towns)
What is the rule for increasing HRA?
Under the 7th Pay Commission, the government had decided that when the dearness allowance (DA) exceeds 25%, the HRA rates would also be increased. In July 2021, a Cabinet Committee chaired by Prime Minister Narendra Modi approved raising the DA to 28%, following which the Finance Ministry also revised the HRA rates. Previously, the HRA rates under the 7th Pay Commission were 24%, 16%, and 8%, which were increased to 27%, 18%, and 9%.
How much will HRA and salary increase at fitment factor 2.86?
As you may know, the fitment factor is the multiplier by which the current basic pay is multiplied to determine the new salary. If the 8th Pay Commission sets the fitment factor at 2.86, employees’ basic pay will become 2.86 times their current salary. Additionally, HRA and other allowances will also increase proportionately.
For example, if an employee’s current basic pay is ₹20,000, the new basic pay could be around ₹57,200. Consequently, his HRA could reach ₹15,444 in city X.
