House
Rent Allowance, which the biggest gain for employees from the 7th Pay
Commission as central government employees get only 14.27 per cent hike
in basic pay effective from January 1, 2016
The HRA hike is likely to happen by October this year including all allowances, sources said.
The committee on allowances is likely to stick with the 7th Pay Commission’s recommendations on allowances.
The
7th Pay Commission recommended the rates at which HRA is to be paid to
24%, 16% and 8% respectively for Class X, Y and Z cities and towns
respectively of new Basic pay (pay in the pay band plus grade pay
multiplying by the fitment factor of 2.57).
The
existing rates of HRA for these cities and towns were 30%, 20% and 10%
of Basic pay (pay in the pay band plus grade pay) respectively.
So how does the HRA component rise so dramatically when the HRA rates have actually come down?
The
answer lies in the fact that HRA is calculated on basic pay alone.
While basic pay will go up more than two-and-a-half times.Thus even
getting a smaller fraction of the much higher new basic pay as HRA
yields well over the current levels of the allowance.
Class
X towns are those with populations of over 50 lakh, Class Y are those
whose population is between 5 lakh and 50 lakh while the Z class towns
are those with populations under 5 lakh.
The
Commission also recommends that the rate of HRA will be revised to 27
percent, 18 percent and 9 percent respectively when DA crosses 50
percent, and further revised to 30 percent, 20 percent and 10 percent
when DA crosses 100 percent.
The
committee on allowances headed by Finance Secretary Ashok Lavasa, which
was set up in July this year, is looking into “the provision of
allowances other than dearness allowance under the 7th Pay Commission
recommendations”, and any other matter relevant to this issue. The
committee was asked to submit report within four months.
In
the wake of intense central government employees’ pressure following
the 7th pay commission recommendations of abolishing 51 allowances and
subsuming 37 others out of 196 allowances, the committee was set up to
examine the recommendations on allowances of the pay panel.
The
committee on allowances, already met with employees unions leaders on
August 4 and September 1 respectively and the committee prepared its
report, the central government employees’ unions leaders said.
“The
committee on allowances is ready to submit its report even two months
in advance, when the Finance minister calls up, the committee will
submit its report.
The
committee is likely to call on Finance Minister Arun Jaitley soon, if
the political situation returns to normal,” official sources added.
The
matters relating to pay and pension as decided by the government have
been implemented with effect from January one this year.
“Until
then, all such new allowances shall continue to be reckoned and paid at
the existing rates under the terms and conditions prevailing in the
pre-revised pay structure as if the existing pay structure has not been
revised,” the finance ministry's pay commission resolution issued on
July 25 said.