8th Pay Commission and Allowances: What Could Happen to HRA, TA and DA-Linked Rates
The 8th Pay Commission must review and rationalise allowances. What the 7th CPC did in 2016 and 2017, today's HRA rates and floors, DA-linked ladders, and the order in which allowances took effect last time.
7 min read · Published 22 October 2026 · Updated
Short answer
The 8th Pay Commission has been asked to review allowances and rationalise them. Nothing has been proposed publicly. The 7th Pay Commission's experience shows that allowances can move later than basic pay, and sometimes without arrears.
Last checked · 7 key figures from the fact register
Key facts
| Fact | Value | Source | Date checked |
|---|---|---|---|
| 8th CPC terms of reference | Pay, allowances, benefits, bonus, gratuity and pensions for Central Government and other listed groups Official source | Gazette of India Extraordinary, 3 Nov 2025 (hosted on 8cpc.gov.in) (opens in a new tab) | |
| 7th CPC recommendations | Fitment factor 2.57; minimum pay ₹18,000; maximum pay ₹2,50,000 Official source | PIB: Highlights of Recommendations of the Seventh Central Pay Commission (hosted on doe.gov.in) (opens in a new tab) | |
| 7th CPC implementation | Rules notified 25 Jul 2016, effective 1 Jan 2016; arrears with August 2016 pay Official order, read on a mirror | Department of Expenditure OM on fixation of pay and payment of arrears, July 2016 (copy hosted by ICAR) (opens in a new tab) | |
| 7th CPC allowances | Effective 1 Jul 2017; no arrears notified Reported by reputable sources | Business Today: central government employees may not get arrears on allowances (opens in a new tab) | |
| DA after the 7th CPC | Restarted at 0% from 1 Jan 2016; 2% from 1 Jul 2016 Official order, read on a mirror | Department of Expenditure OM on DA from 1.7.2016 (copy hosted by ICAR) (opens in a new tab) | |
| HRA for central employees | 30% / 20% / 10% for X / Y / Z cities now that DA is above 50% Official order, read on a mirror | StaffNews: 7th CPC House Rent Allowance, Finance Ministry OM (text of the OM) (opens in a new tab) | |
| DA crossed 50% | From 1 Jan 2024 Reported by reputable sources | Indian Pay Calculator: DA hike approval timing history (opens in a new tab) |
Last verified 22 October 2026.
What the terms of reference require
Para 2(d) of the Resolution asks the Commission "to review the existing allowances and conditions of their admissibility and recommend their rationalization keeping in view the multiplicity of allowances". Para 2(b) adds an emolument structure that attracts talent and promotes efficiency.
What the 7th Pay Commission did
The Commission recommended abolishing 52 allowances and subsuming 36 others, and said any allowance not mentioned in its report would cease to exist. It put the rise in allowances at 63%, against 16% for pay. For HRA it recommended 24%, 16% and 8% of the new basic pay for X, Y and Z cities, stepping up when DA crossed set levels.
The order things happened in
This is the most useful precedent for planning.
- The Commission reported on 19 November 2015.
- Revised pay rules were notified on 25 July 2016, in force from 1 January 2016.
- A Department of Expenditure order of 4 November 2016 said all allowances would continue at existing rates until a final decision on allowances.
- Revised allowances took effect from 1 July 2017, and no arrears were notified for them.
The practical lesson: your basic pay and your allowances may not change on the same date, and arrears may not apply to both. That is why the arrears calculator leaves HRA out by default.
HRA today
The Government adopted the following HRA rates in July 2017. They step up as DA crosses 25% and 50%:
| City class | DA up to 25% | DA above 25% | DA above 50% (now) | Minimum |
|---|---|---|---|---|
| X | 24% | 27% | 30% | ₹5,400 |
| Y | 16% | 18% | 20% | ₹3,600 |
| Z | 8% | 9% | 10% | ₹1,800 |
DA crossed 50% from 1 January 2024, so 30%, 20% and 10% apply. If DA restarts at zero under the 8th CPC and the same rules were used, the percentage would fall back to 24%, 16% and 8% even though basic pay rose. Whether that would happen is not known.
Allowances that move with DA
Some allowances and ceilings are written to rise by 25% each time DA rises by 50%. The 7th CPC proposed it for the gratuity ceiling and for the consolidated pay of certain regulatory-body members. Transport of personal effects on transfer, the Children Education Allowance and the hostel subsidy rise by the same rule too. If DA restarts at zero, these ladders also restart, which is another reason pay revision is not just a basic pay change. What the 8th CPC recommends is not published.
See our guides on Children Education Allowance and travelling allowance on transfer.
What to do now
- Do not plan a house move or a rent commitment around an expected new HRA.
- Keep your city classification and the HRA order that applies to your posting handy.
- After any revision, check basic pay, DA, HRA and each allowance separately on your payslip.
- Follow the 8th Pay Commission tracker for allowance announcements.
Related
- 8th Pay Commission: complete guide
- Salary scenarios by pay level
- HRA exemption calculator for the tax side of HRA
Official sources
- Gazette of India Extraordinary, 3 November 2025
- PIB: Highlights of the 7th CPC recommendations
- Department of Expenditure OM of 4 November 2016
FAQ
What do the 8th Pay Commission's terms of reference say about allowances?
It must review the existing allowances and the conditions for their admissibility and recommend their rationalisation, keeping in view the multiplicity of allowances.
What is the HRA rate for central government employees now?
30% of basic pay in X cities, 20% in Y and 10% in Z, because DA is above 50%. HRA is never less than ₹5,400, ₹3,600 and ₹1,800 a month for X, Y and Z cities.
Will HRA fall after the 8th Pay Commission?
Not decided. In 2016 the 7th CPC recommended 24%, 16% and 8% on the new basic pay, rising in steps as DA grew. If the 8th CPC does the same, the HRA percentage would drop even as basic pay rises.
Did the 7th CPC pay allowance arrears?
Arrears of revised pay were paid with August 2016 salary. Revised allowances took effect from 1 July 2017 and no arrears were notified for them, according to Business Today.
Will the 7th CPC allowances be abolished?
The 7th CPC abolished 52 allowances and subsumed 36 others. The 8th CPC is again asked to rationalise them, but no proposal has been published.
Written by
PerkNavigate Editorial Team
Some figures come from reputable secondary sources and are marked in the post.
Every guide is checked against official sources. How we verify perks.
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