HRA is currently paid at 30% for X (population of 50 lakh & above), 20% for Y (5 to 50 lakh) and 10% for Z (below 5 lakh) category of cities. The seventh pay commission has recommended reduction in the existing rates to 24% for X, 16% for Y and 8% for Z category of cities.
As the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA shall not be less than Rs5400, Rs3600 and Rs1800 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 Rs18,000. This will benefit more than 7.5 lakh employees belonging to Levels 1 to 3.
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7th CPC had also recommended that HRA rates will be revised upwards in two phases to 27%, 18% and 9% when dearness allowance (DA) crosses 50% and to 30%, 20% and 10% when DA crosses 100%.
Keeping in view the current inflation trends, the Government has decided that these rates will be revised upwards when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA.
Here is a list of revision of cities classified for house rent allowance:
Cities falling under X (population of 50 lakh & above) category
Hyderabad, Delhi, Ahmedabad, Bengaluru, Greater Mumbai, Pune, Chennai, Kolkata.
Cities falling under Y (population between 5 lakh & 50 lakh) category
Vijaywada, Warangal, Greater Visakhapatnam, Guntur, Nellore, Guwahati, Patna, Chandigarh, Durg-Bhilai Nagar, Raipur, Rajkot, Jamnagar, Bhavnagar, Vadodara, Surat, Faridabad, Gurgaon, Srinagar, Jammu, Jamshedpur, Dhanbad, Ranchi, Bokaro Steel City, Belgaum, Hubli-Dharwad, Mangalore, Mysore, Gulbarga, Kozhikode, Kochi, Thiruvanthapuram, Thrissur, Malappuram, Kannur, Kollam, Gwalior, Indore, Bhopal, Jabalpur, Ujjain, Amravati, Nagpur, Aurangabad, Nashik, Bhiwandi, Solapur, Kolhapur, Vasai-Virar Cty, Malegaon, Nanded-Waghala, Sangli, Cuttack, Bhubaneswar, Raurkela, Amritsar, Jalandhar, Ludhiana, Puducherry, Bikaner, Jaipur, Jodhpur, Kota, Ajmer, Salem, Tirupur, Coimbatore, Tiruchirappalli, Madurai, Erode, Dehradun, Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, Jhansi, Asansol, Siliguri, Durgapur.
Cities classified under Z (population below 5 lakh) category
The remaining cities and towns in various states or union territories which are not covered by under X or Y category of cities come under it and will be paid at 10%.