The Union Cabinet has approved the recommendations of the 7th Pay Commission on allowances, including house rent allowance (HRA). The increased allowance, which comes into effect from July 1, will impose an additional annual burden of Rs 30,748 crore on the exchequer.
The modification, which is based on the recommendations of Committee on Allowances, will result in additional burden of Rs 1,448 crore over and above suggestions made by 7th Central Pay Commission.
HRA constitutes 60% of the total allowance of a government employee’s pay.
More than 47 lakh government employees finally got to hear some good news on HRA and other allowances in the Cabinet briefing.
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The 7th Pay Commission headed by AK Mathur had earlier proposed the rate of House Rent Allowance (HRA) at 24%, 16% and 8% of the Basic Pay for Class X, Y and Z cities respectively.
The panel had also recommended that the rate of HRA will be revised to 27%, 18% and 9% when DA crosses 50%, and further revised to 30%, 20% and 10% when DA crosses 100%.
A committee headed by the finance secretary, Ashok Lavasa had on April 27 submitted its report to finance minister Arun Jaitley.
The Ashok Lavasa committee was constituted in June last year after the government implemented the recommendations of the 7th Pay Commission.
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Out of total 196 allowances, it had recommended abolition of 52 and subsuming of another 36 into larger existing ones.
All government employees are still getting allowances as per the old structure.
The Cabinet meet was expected to take place in the morning but as Prime Minister Narendra Modi was on foreign trip and returned home on Wednesday morning only hence it could not take place.
