After DA Hiked To 50%, How Much Will HRA Rise? When Employees Will Receive It?

In a big Holi gift, the dearness allowance (DA) of central government employees surged from 46% to 50% and the revised DA to get effective from January 1, 2024. Government announced the hike in the 1st week of March, 2024. The move has already been implemented for central employees all over India from Jan 1, 2024. According to rules, when DA touches 50%, a change in House Rent Allowance (HRA) takes place along with some other allowances. After rise in DA, central government employees are expecting to witness changes in other allowances.

It is important to note that Personnel and Training issued a list of allowances that will get revision post DA hike. But, an order is yet to be issued pertaining to changes in HRA. It is yet to be seen if the central government will issue a different order highlighting the surge in HRA after rise in DA to 50%. It is also to be seen how much will there be a rise in HRA. It is worth mentioning here that HRA depends on the city type where the employees have been living.

To calculate HRA, cities have been distinguished in three categories namely X, Y, and Z on the basis of Census. As per 7th pay Commission recommendations, HRA got rationalized to 24%, 16%, and 18% of the basic pay for X, Y, and Z category cities from July 1, 2017.

Earlier, when DA soared to 25%, HRA rates came under revision i.e. 27%, 18%, and 9% respectively of the basic pay of X, Y, and Z categories cities.

For instance, if the base pay of central government employee is Rs 45,00, the HRA would be calculated in the following manner:

For X City: 27% of Rs 45,000 will be Rs 12,150. For Y city, it will be 18% of Rs 45,000 will be Rs 8,100, and for Z city, 9% of 45,000 will be Rs 4,050.
Therefore, the HRA would be Rs 12,150 for type X city, Rs 8,100 for type Y city, and Rs 4,050 for type Z city.

Now the 7th Pay Commission has already issued recommendations that the HRA rates would be revised to 30%, 20% and 10% of the basic pay in X, Y, and Z cities when DA surges to 50%.

So the HRA of the central government with basic salary at Rs 45,000 would be revised in the following way given below:

For X City: 30% of Rs 45,000 will be Rs 13,500. For Y city, it will be 20% of Rs 45,000 will be Rs 9,000, and for Z city, 10% of 45,000 will be Rs 4,500.

So, the HRA would be Rs 13,500 for type X city, Rs 9,000 for type Y city, and Rs 4,500 for type Z city.

It remains interesting to watch if the Centre is going to issue a separate directive highlighting the revision in HRA of central government employees. According to Office Memorandum of the Ministry of Finance, the revision in HRA may get implemented without issuing any clear instruction or order.

The revised HRA and other allowances for the central government employees are expected to come from the month's salary the moment DA touches 50% and that has already become effective rom January 1, 2024.