Around 48 lakh central government employees will see their salaries for July rise as Ministry of Finance has notified the allowances under Seventh Central Pay Commission with 34 modifications. Around 34 lakh civilian employees and 14 lakh defence personnel will be receive their salaries with modified allowance rates.

Union Cabinet approved the recommendations of 7th Pay Commission on allowances with 34 modifications on June 28, 2017. Finance Ministry instructed other ministries to come up with their Orders on Allowances governed by them so that the revised salaries reflect in the salaries for month of July of their employees.

The recommendations on allowances by 7th Pay Commission would have put an additional burden of Rs 29,300 crores on the exchequer. In its new form, however, the Pay Commission allowance will translate into additional burden of Rs 30,748 crore on the exchequer every year.

House Rent Allowance shall not be less than 5,400 per month, 3,600 per month and 1,800 per month calculated at 30 per cent of minimum pay for X (population of 50 lakh & above), 20 per cent for Y (5 to 50 lakh) and 10 per cent for Z (below 5 lakh) category of cities.

In the official notification in Gazetter of India, HRA shall be revised to 27 per cent, 18 per cent & 9 per cent of Basic Pay in X, Y and Z cities when Dearness Allowance (DA) crosses 25 per cent and further to 30 per cent, 20 per cent and 10 per cent of Basic Pay in X, Y and Z cities when DA crosses 50 per cent.

HRA has been one of the talking points since 7th Pay Commission was formed as it makes up a substantial share in salaries of central government employees.

The Union government has also decided to do away with the provision of free ration to be discontinued for defence force personnel in peaceful areas. However, Ration Money Allowance (RMA) will be credited directly to their bank accounts.

Fixed Medical Allowance for central government allowance has also been bumped up to Rs 1000 from Rs 500. Ministerial staff will continue to get Hospital Patient Care Allowance/ Patient Care Allowance at Rs 4100 for level 8 and below and Rs 5300 for level 9 and above.

Coming under pressure from central government employees over drastic chnages in the allowance structure under 7th Pay Commission, the Cabinet formed a Committee on Allowances under Finance Secretary Ashok Lavasa last year in June. The Committee was tasked to appraise the extensive changes suggested by the 7th Pay Commission.

The Lavasa Committee handed over its review report to the Finance Minister in April after consulting representations from various government departments. The report, post approval, was forwarded to Empowered Committee of Secretaries (E-CoS) for their consideration and consolidation.

After receiving the final proposals from the Empowered Committee on June 1, the Cabinet approved the recommendations on allowance on June 28.