Central Government Employees Anticipate HRA Increase Following DA Hike
7th Pay Commission : Central government employees in India have a reason to be optimistic. Following a recent enhancement in the Dearness Allowance (DA), the festive season promises to be more prosperous for them. Not only are they receiving their bonuses, DA arrears, and other allowances ahead of Diwali, but the horizon also hints at an impending hike in the House Rent Allowance (HRA).
Background of the DA Hike
The central government recently announced an increase in the DA, which is now set at 46%, effective from July 1, 2023. This was a significant leap from its previous figure. It’s important to note that DA adjustments have historically had an influence on other allowances, including the HRA. The DA’s last surge in July 2021, when it crossed the 25% threshold, led to a 3% revision in the HRA, taking its upper limit from 24% to 27%.
Next on the Agenda: HRA Revision
Following the recent boost in the DA, there’s mounting speculation about when the next HRA revision will be. According to the Department of Personal and Training (DoPT), the HRA revision for central government employees is often aligned with fluctuations in the DA. The existing HRA rates, classified based on X, Y, and Z tier cities, stand at 27%, 18%, and 9% respectively. These rates were last adjusted in line with the DA in July 2021.
However, as per a memorandum issued by the government in 2016, the HRA is periodically revised in tandem with the DA. Indications suggest that the next revision is slated for 2024, and it’s highly anticipated to take place in the initial months.
Expected HRA Increase
With the forthcoming revision, the HRA is projected to increase by 3%. This means that the maximum HRA rate, which is currently at 27% for employees in X category cities, will escalate to 30%. But this will only be initiated once the Dearness Allowance crosses the 50% mark, a milestone expected by January 2024. To put this into perspective, upon the DA surpassing 50%, the HRA will be adjusted to 30% for X category cities, 20% for Y category cities, and 10% for Z category cities.
This prospective hike not only demonstrates the government’s commitment to adjusting allowances in line with inflation and the cost of living but also brings cheer to countless central government employees eagerly waiting for the revision.
