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.
HRA rates current status
However, House Rent Allowance (HRA) will be determined according to the old formula. 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%. As you may know, the fitment factor is the multiplier by which the current basic pay is multiplied to determine the new salary.
Fitment Factor
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.
Below we are presenting the calculation of basic salary and HRA according to employees and cities with different pay matrices. It’s important to note that these calculations are based on estimates. The government has yet to make a formal announcement regarding the 8th Pay Commission, but it’s believed that government employees may soon hear some news that will bring smiles to their faces.