8th Pay Commission HRA changes: NC-JCM, defence employee body, others propose up to 40% HRA

Increasing the current house rent allowance (HRA) rates, which are 10% (Z cities), 20% (X cities), and 30% (Y cities), is a prominent demand of key central government employee bodies from the 8th Pay Commission (8th CPC).. Although several employee and pensioner organisations have recommended varying HRA rates, almost all of them are advocating for a considerable rise, claiming that it would enable many employees to deal with growing house rents.

The 7th Pay Commission decided on three HRA rates at the time of implementing its report in 2016. The rates were 8%, 16% and 24% for Z, Y and X categories, respectively. When DA reached 50% in January 2024, the Finance Ministry increased the rates to 10%, 20% and 30%, respectively. Here we take you through the HRA recommendations five major employee bodies have put forward before the 8th Pay Commission.

The National Council – Joint Consultative Machinery (staff side), (NC-JCM), which is the umbrella body of all central government employees, in its memorandum submitted to the 8th Pay Commission has recommended 40% (X cities), 35% (Y cities) and 30% (Z cities) HRA rates. The employee body has suggested increasing HRA with a rise in DA.

The Indian Railways Technical Supervisors’ Association (IRTSA), which represents technical employees of Indian Railways, has recommended that the current three-tier HRA classification should be made into four as per the rates given below-
A class cities (40%+DA): Population 50 lakh and above
B class cities (30%+DA): Population 20 lakh to 50 lakh
C class cities (20%+DA): Population 5 lakh to 20 lakh
D class cities (10%+DA): Population below 5 lakh

IRTSA has also suggested that HRA be linked to the Consumer Price Index or DA. The rates shall automatically increase by 25% whenever DA goes up by 25%, says IRTSA in its memorandum.

The All India Defence Employees’ Federation (AIDEF), which represents a large number of defence civilian employees, has recommended 40% (X cities), 35% (Y cities) and 30% (Z cities) HRA rates to the 8th Pay Commission.

The Federation of National Postal Organizations (FNPO), the key body of postal employees in India, has recommended HRA rates at 30%, 35% and 40% for Z, X and Y cities. FNPO says that HRA should be linked to DA and should also be extended to pensioners.

AINSPEF, in its memorandum, has pushed for three HRA rates. For X, Y and Z cities, it has proposed HRA rates at 36%, 24% and 12%, respectively. The employee body has recommended DA to be merged with the basic salary when it crosses 25% and the remaining DA to be provided on new basic salary.