7th Pay Commission: Government To Increase HRA By 3% & DA By 34% Before Assembly Polls

7^th Pay Commission Latest Update: Employees of the Central Government are in for a big treat, as the government has decided to increase their House Rent Allowance (HRA) as well, following a significant increase in Dearness Allowance (DA) last year. 

Entire Dearness Allowance To Increase By 34% 

According to media sources, the entire Dearness Allowance would be hiked by 34% soon, allowing for an increase in the HRA. After accounting for previous year's increase, the DA is currently at 31%. The HRA is only increased when the DA exceeds 25%, according to the guidelines. Last year, the central government raised the DA to 28% in July 2021, and the HRA also increased after that.

Government To Release 18 Months DA Arrears Soon  

As per several media reports, the central government is planning to release the 18 months DA arrears of central government employees. Media reports says that the government is planning to take the decision on releasing the arrears around Assembly Polls. The employees have been eagerly waiting for the government to release it.  

HRA (House Rent Allowance) Distributed Into Three Categories  

The HRA is divided into three categories, each with a percentage of 27%, 18%, and 9%. According to the most recent reports, the HRA is expected to increase by 3% at the next revision. It is currently at 27% and will be raised to 30%, only if the DA reaches 50%.

According to memorandum from the Department of Transportation, as DA reaches 50%, HRA will be reduced to 30%, 20%, and 10%.

What is HRA (House Rent Allowance)? 

HRA: House Rent Allowance is provided by your employer as a stipend for your rented apartment. Even if your employer does not pay you HRA or if you are self-employed, you can claim this income tax deduction.

However, in order to be excluded from HRA tax deductions, you must live in rental housing. Someone who owns a home and receives HRA from their employer is not eligible to claim tax deductions under Section 80GG.