- The 8th Pay Commission may raise House Rent Allowance (HRA) significantly with a 2.0 fitment factor.
- A Level 13 employee's basic pay could rise to Rs 2,46,200, resulting in Rs 73,860 HRA in X cities.
- Level 4 employees might see basic pay double to Rs 51,000, with HRA varying by city category.
The proposed revision under the 8th Pay Commission could significantly increase House Rent Allowance (HRA), with employees in higher pay levels potentially receiving up to Rs 73,860 per month if a 2.0 fitment factor is adopted and the existing HRA rates remain unchanged.
While the fitment factor is not applied directly to HRA, it raises the basic pay, which serves as the base for calculating the allowance. As a result, any increase in the fitment factor automatically pushes up HRA.
Illustrative calculations by BankBazaar, as cited in a report, show that a Level 13 employee could see revised basic pay rise to Rs 2,46,200 under a 2.0 fitment factor. At the current HRA rate of 30% for X-category cities, that translates into an HRA of Rs 73,860 per month. Employees posted in Y and Z category cities could receive Rs 49,240 and Rs 24,620, respectively.
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The same formula applies across the pay matrix. For instance, a Level 4 employee with a current basic pay of Rs 25,500 would see revised basic pay increase to Rs 51,000 under a 2.0 fitment factor. Based on existing HRA rates, the monthly allowance would work out to Rs 15,300 in X cities, Rs 10,200 in Y cities and Rs 5,100 in Z cities.
The 8th Pay Commission is currently consulting stakeholders on salary and pension revisions for around 55 lakh central government employees and nearly 69 lakh pensioners. Employee unions have sought fitment factors ranging from 2 to 5, while the government is expected to balance these demands against the fiscal impact.
However, the calculations remain illustrative. The final fitment factor and HRA structure will be determined only after the Commission submits its recommendations and the Centre approves them.
"Even a slight change in the multiplier (fitment factor) can significantly affect salaries at every pay level. Its impact also extends to benefits linked to basic pay, such as House Rent Allowance (HRA)," said Adhil Shetty, CEO of BankBazaar.
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