7th Pay Commission: Cabinet meeting today; HRA may get fixed at 27%; arrears by July 1

Union Cabinet led by Prime Minister Narendra Modi will meet on Wednesday June 14, 2017 in New Delhi. Among other issues on the agenda will be the arrears like House Rent Allowance (HRA), Dearness Allowance (DA), Transport Allowance (TA), etc, under the 7th Pay Commission. 

Finance Minister Arun Jaitley had set up a committee called Committee on Allowances under Finance Secretary Ashok Lavasa last year after accepting all the proposals of 7th Pay Commission barring allowances. The Committee was supposed to give its report on the future of allowances. 

The 7th Pay Commission has proposed subsuming nearly 200 allowances into one except a few. 

The 7th CPC had also proposed that House Rent Allowance or HRA be capped at 24%. This did not go well with central government employees who demanded a higher HRA at 30%. 

However, sources say that the report submitted by Lavasa-led Committee on Allowances has fixed HRA at 27%. 

As per Income Tax Act, HRA is tax exempt and can go up to 50% of basic salary of an employee. 

The Committee has suggested HRA to be at par with the 6th Pay Commission at 30%, 20% and 10% as against 7th Pay Commission's recommendations of 24%, 16% and 8%. 

The 7th Pay Commission report has recommended abolition of 52 allowances and subsuming of another 36 into larger existing ones.

There are nearly 50 lakh government employees and similar number of pensioners who are eagerly awaiting the outcome of this Cabinet meeting as they are likely to be paid arrears from January 2016.