Date : 17.4.2017

7th Pay Commission: How the report on allowances may affect salaries of central govt employees

Know how the report on HRA and other allowances may affect salaries of central government employees and pensioners.

New Delhi: A high-level committee, headed by finance secretary Ashok Lavasa, which was asked to examine the 7th Pay Commission recommendation on allowances, is likely to submit its final report to Finance Minister Arun Jaitley this week.

The final recommendations on allowances will benefit over 47 lakh central government employees and 53 lakh pensioners.

The Lavasa Committee was constituted in June last year after the government implemented the recommendation of the 7th Pay Commission.

The 7th Pay Commission had earlier proposed the rate of House Rent Allowance (HRA) at 24 percent, 16 percent and 8 percent of the Basic Pay for Class X, Y and Z cities respectively.

The Commission had also recommended that the rate of HRA will be revised to 27 percent, 18 percent and 9 percent when DA crosses 50 percent, and further revised to 30 percent, 20 percent and 10 percent when DA crosses 100 percent.

The existing rates of HRA for Class X, Y and Z cities and towns are 30 percent, 20 percent and 10 percent of Basic pay (pay in the pay band plus grade pay).

Population of City			DA above
	Present	Proposed	50%	100%
Above 50 lakh (Class X)	30%	24%	27%	30%
5 lakh to 50 lakh (Class Y)	20%	16%	18%	20%
Below 5 lakh (Class Z)	10%	8%	9%	10%

Assumingly, if the Committee accepts the bare recommendations of A K Mathur-led 7th Pay Commission then the HRA component of central government employees will increase ranging between 106 percent and 122 percent.

Take, for instance, a central government employee at the very bottom of the pay scale, where the basic pay (pay of pay band + grade pay) is now Rs 7,000, would currently be entitled to an HRA of Rs 2,100 in a Class X city. As per 7th Pay Commission, the new entry level pay at this level is Rs 18,000 per month against which the new HRA for a Class X city would be Rs 4,320 per month, that is 106 percent more than the existing level.

Similarly, at the highest level of the pay scale, the Cabinet Secretary and officers of the same rank have a basic pay of Rs 90,000, which means they are entitled to current HRA of Rs 27,000 in Class X towns. After the revised pay scale, the new basic pay is Rs 2.5 lakh, for which the HRA would be Rs 60,000, meaning a hike of 122 percent.

Existing Basic Pay (6th CPC)	HRA (6th CPC)			Proposed Entry Pay as per 7th CPC	Proposed HRA as per 7th CPC
	Class X	Class  Y	Class Z		Class X	Class Y	Class Z
7000	2100	1400	700	18000	4320	2880	1440
13500	4050	2700	1350	35400	8496	5664	2832
21000	6300	4200	2100	56100	13464	8976	4488
46100	13830	9220	4610	118500	28440	18960	9480
90000	27000	18000	9000	250000	60000	40000	20000

As far as Transport Allowance (TA) is concerned, Pay Commission had proposed no increase.