7th Pay Commission: Cabinet to take up HRA allowance once Jaitley returns from South Korea

Key Highlights: 

• 7th Pay Commission to be looked again once Jaitley returns from South Korea
• 7PC proposed subsuming nearly 200 allowances into one except a few
• 7PC has recommended abolition of 52 allowances 

Union Cabinet led by Prime Minister Narendra Modi was suppose to look at the allowances like HRA related to 7th Pay Commission on Wednesday, however, the agenda will have to wait for a little while until Finance Minister Arun Jaitley returns from South Korea. 

On Wednesday, the cabinet was expected to take on issues on arrears like House Rent Allowance (HRA), Dearness Allowance (DA), Transport Allowance (TA), etc, under the 7th Pay Commission.

Many media reports stated that the report on allowance and HRA was tabled by the committee before the Union Cabinet, but a decision on the same will be taken after Jaitley's four day official visit to Republic of Korea. 

Jaitley is presently on a four day Official visit to Republic of Korea to participate in the Fifth India-Korea Financial Dialogue and the 2nd Annual Meeting of the Board of Governors of AIIB.

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.  

Under the 7PC, it has been proposed  subsuming nearly 200 allowances into one except a few. 

It 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 indicated that 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.

Over 1 crore government employees are keenly waiting for this HRA allowance clearance from the Union Cabinet.