Discussion surrounding the 8th Pay Commission is gaining momentum as central government employees and pensioners await details about the upcoming salary revision. Employee unions are demanding significant increases in basic salaries, pensions, and allowances, while experts are speculating on the impact these changes could have on monthly income.

Experts believe that the benefits of the 8th Pay Commission may not be limited to just the basic salary. Allowances like house rent allowance (HRA) could also see significant increases, as HRA is directly linked to basic pay. Any increase in the fitment factor could increase not only the basic salary but also several other components of the salary.

Adhil Shetty, CEO of BankBazaar, said that employees shouldn't focus solely on the revised basic salary. He also believes that the impact of the new pay commission on salary-related benefits like HRA should be considered, as this could significantly alter overall monthly income.

How is HRA calculated and why is it important?

Currently, central government employees receive HRA based on the city category they are posted in. Employees posted in X-category cities receive 30% of their basic salary as HRA, while those in Y-category cities receive 20%, and those in Z-category cities receive 10%.

If the fitment factor increases under the 8th Pay Commission, the HRA will automatically increase as the basic salary increases. Employees working in metropolitan cities and other large urban centers may see a larger increase in their monthly allowance.

For example, if a Level-1 employee's current basic salary is ₹18,000, a fitment factor of 2.0 could increase the revised basic salary to ₹36,000. In an X-category city, the HRA could increase to approximately ₹10,800.

How much can different fitment factors increase salary and HRA? If the fitment factor is fixed at 2.28, the basic salary of a Level-1 employee could increase to approximately ₹41,040, while the HRA could reach approximately ₹12,310 in an X-category city.

If the fitment factor reaches 2.57, the revised basic salary could increase to ₹46,260. HRA could increase to approximately ₹13,880 in X-category cities, ₹9,250 in Y-category cities, and ₹4,630 in Z-category cities.

For a Level-10 employee, whose current basic salary is ₹56,100, a fitment factor of 2.57 could increase their revised basic salary to approximately ₹1.44 lakh. Their HRA could increase to approximately ₹43,250 in X-category cities, ₹28,840 in Y-category cities, and ₹14,420 in Z-category cities.

PC: News24