Is HRA calculated differently for government employees?
- Posted:4th February, 2025
- Updated:4th February, 2025
The House Rent Allowance (HRA) for government employees in India is based on the following factors:
City class:
The HRA rate depends on the city class, which is X, Y, or Z:
Classification of Cities/Towns | Population Criteria | Rate of HRA as per 7th CPC (Central Pay Commission) |
---|---|---|
X | 50 lakhs+ | 24% |
Y | 5 lakhs to 50 lakhs | 16% |
Z | Below 5 lakhs | 8% |
Dearness Allowance (DA):
The HRA rate is revised when the DA crosses certain levels:
- When the DA crosses 25%, the HRA rate is revised to 27% for X cities, 18% for Y cities, and 9% for Z cities.
- When the DA crosses 50%, the HRA rate is revised to 30% for X cities, 20% for Y cities, and 10% for Z cities.
HRA is calculated by taking the lowest value of the following:
- The actual HRA received
- 50% of basic salary + DA for metro cities, or 40% for non-metro cities
- The actual rent paid after subtracting 10% of basic salary + DA
Salaried individuals can claim exemptions for HRA under Section 10 (13A), rule number 2A of the Income Tax Act.
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