The Seventh Central Pay Commission (CPC) resolution of the government has been published in the Gazette of India. The revised rates of the allowances shall come into effect from 1st July 2017 and shall affect more than 48 lakh central government employees.For most of the allowances that were retained, the 7th CPC recommended a raise commensurate with inflation as reflected in the rates of Dearness Allowance ( DA ). Accordingly, fully DA-indexed allowances such as Transport Allowance were not given any raise.Allowances not indexed to DA were raised by a factor of 2.25 and the partially indexed ones by a factor of 1.5. The quantum of allowances paid as a percentage of pay was rationalised by a factor of 0.8.As far as House Rent Allowance (HRA) is concerned, the recommendations of the 7th CPC were retained and HRA was rationalised by a factor of 0.8.At present, house rent allowance (HRA) is paid at the rate of 30% for X category of cities(cities with population of 50 lakh & above), 20% for Y category of cities (cities with population of 5lakh to 50 lakh) and 10% for Z (with population below 5 lakh) category of cities. 7th Central Pay Commission had suggested that these existing rates be cut to 24% for X, 16% for Y and 8% for Z category of citiesThe government felt that the HRA at the lower suggested rates may not be enough for employees in lower pay brackets. Consequently, the government decided that HRA shall not be less than Rs 5400, Rs 3600 and Rs 1800 for X, Y and Z category of cities respectively. This floor rate has been calculated at 30%, 20% and 10% of the minimum pay of Rs 18000. This will increase payouts to more than 7.5 lakh employees across Levels 1 to 3.The 7th CPC had also recommended that HRA rates should be revised upwards in two phases to 27%, 18% and 9% when DA crosses 50% and to 30%, 20% and 10% when DA crosses 100%. However, the Government has been more generous and decided that these rates will be revised upwards earlier i.e. when DA crosses 25% and 50% respectively. This will benefit all employees who do not reside in government accommodation and get HRA.The notification can be seen here The modifications approved by the Government in the recommendations of the 7th CPC on allowances will lead to a modest increase of Rs 1448.23 crore per annum over the projections made by the 7th CPC. The 7th CPC, in its Report, had projected the additional financial implication on allowances at Rs 29,300 crore per annum. The combined additional financial implication on account of the 7th CPC recommendations along with the modifications approved by the Cabinet is estimated at Rs 30748.23 crore per annum.