As per the 7th pay commission, the salary of each level employee increases with the increase in their DA and HRA.
7th pay commission : There is a double bonus for the 7th pay commission employees of the Central Government. After the hefty Diwali bonus, it is time for them to increase their salary from January 2022. If some media reports are to be believed, the Finance Ministry is working towards implementing the House Rent Allowance (HRA) of over 11.56 lakh employees with effect from January 1, 2021.
This proposal has also been sent to the Railway Board for approval. The Indian Railway Technical Supervisors Association (IRTSA) and the National Federation of Railwaymen (NFIR) are demanding the implementation of House Rent Allowance (HRA) from January 1, 2021.
If the Finance Ministry accepts the demand, then the HRA of lakhs of employees will increase along with getting the dues. These benefits can range from Rs 5400 to Rs 8100 per month. As per the 7th pay commission, the salary of each level employee increases with the increase in their DA and HRA.
What is HRA?
HRA is a salary component paid by an employer to employees for the housing cost of living in that city. Employers decide the HRA amount to be paid based on criteria like salary structure, salary amount and city of residence.
Though it is a part of your salary, HRA is not fully taxable, subject to conditions a percentage of HRA is exempted under section 10(13A) of IT Act, 1961. You can discuss this with your employer to ensure that you save the maximum tax allowed as per the Income Tax Act.
The HRA deduction will be calculated at 50% of the basic salary for employees residing in metro and 40% for non-metro city residence. In case of salaried persons without DA component or commission in their remuneration, HRA allowance will be 40 or 50% of their basic pay.