8th Pay Commission: The 8th Pay Commission is preparing to bring about major changes not only in the basic salary but also in HRA, medical and travel allowances. Know what could be the new HRA rates for X, Y, Z cities and how these allowances are linked with DA.
8th CPC Salary Calculator: Whenever there is talk about the 8th Pay Commission, everyone’s attention is focused on the fitment factor and basic salary. But the calculation of your monthly income is not complete with just the basic salary. Allowances are a major part of the actual ‘take-home’ salary. And this time in the 8th Pay Commission, along with the basic salary, there are preparations for major and important changes in the rules of these allowances as well.
It is reported that the government can re-formulate the existing structure of House Rent Allowance (HRA), Medical Allowance, and Travel Allowance (TA) according to today’s rising inflation and needs. This change will bring a double good news for lakhs of employees.
Let’s go deep into this topic today and know what changes can be made in these 3 important allowances in the 8th Pay Commission and what effect it will have on your pocket.
1. House Rent Allowance (HRA): Rules will be reset
HRA is the allowance that the government gives you for living in a rented house in your city. The 7th Pay Commission had divided cities into three categories according to their population – X, Y, and Z.
What was the basic rule of the 7th Pay Commission?
When the 7th Pay Commission came into effect on 1 January 2016, the HRA rates were:
X category cities (metro):
24% of basic salary
Y category cities (big cities):
16% of basic salary
Z category cities (small towns/villages):
8% of basic salary
Also, there was a rule that when dearness allowance (DA) crosses 25%, the rates will become 27%, 18%, 9% and when DA crosses 50%, the rates will become 30%, 20%, 10%.
How will the rules change in the 8th Pay Commission?
1. HRA rates will be reset
Just like DA starts from zero in every new pay commission, there is every possibility that the HRA rates will also revert to their original base rate i.e. 24%, 16%, and 8%.
2. So how will the benefit be?
The real benefit will be in two ways.
HRA on increased basic salary
The biggest benefit is that HRA will be calculated on your new and increased basic salary.
Example
Suppose your current basic salary is ₹35,400 (level-6) and you live in X category city. Currently your HRA (at the rate of 30%) is ₹10,620.
Now suppose, in the 8th Pay Commission your basic salary increases to ₹90,000.
Even at the reset rate of 24%, your new HRA will be ₹21,600 (24% of 90,000).
That is, despite the reduction in the rate of HRA, the HRA coming in your pocket will be more than double!
2. Medical Allowance
The 7th Pay Commission had abolished the fixed medical allowance for most working employees and instead focused on health schemes like CGHS. But pensioners who do not come under the purview of CGHS get a fixed medical allowance.
Current status: Pensioners currently get a fixed medical allowance (FMA) of ₹ 1000 per month.
What is expected in the 8th Pay Commission?
Increase in allowance amount: There has been a huge increase in medicines and doctor’s fees since 2017. Given this, it is almost certain that the 8th Pay Commission may increase the fixed medical allowance for pensioners from ₹ 1000 to at least ₹ 2000 or ₹ 3000 per month. This will be a big relief for lakhs of pensioners who depend on this allowance for their health needs.
3. Travel Allowance (TA)
TA is given to employees for the expenses of commuting from their home to office. This allowance is directly linked to dearness allowance (DA).
Current rules: Whenever DA increases, it also affects the total amount of TA.
What will change in the 8th Pay Commission?
Effect of DA merger
When the current DA (which may be above 60% by then) will be merged with the basic salary in the 8th Pay Commission, the calculation of TA will change completely. It will be decided on a new basis.
Increase according to cities
In the last 10 years, there has been a huge increase in the prices of petrol-diesel and the cost of public transport. Keeping all these things in mind, the 8th Pay Commission can make a significant increase in the basic rates of TA, so that it remains relevant according to today’s expenses.
What is the gist of the whole news?
The 8th Pay Commission will not only transform your basic salary, but it will also give a new and better look to your allowances. Despite the reset of HRA rates, the HRA you get in your pocket will increase significantly due to the increased basic salary. At the same time, an increase in medical allowance for pensioners and a rational increase in TA for all will ensure that the benefit of your increased salary is not only visible on paper, but its concrete effect is also felt in your take-home salary. This change will significantly help millions of employees to fight inflation and maintain a better standard of living.
Most Read Articles:
- School Closed: Schools and colleges closed in many states due to torrential rains, know the condition of your area
- School Closed: Schools and colleges closed in many states due to torrential rains, know the condition of your area
- Credit Card Link UPI: Link your credit card to UPI from home, know step-by-step guide
