The 8th Pay Commission, which will revise salaries and pensions for central government employees, has been approved by the Union Cabinet and is expected to be implemented next year. The final salary adjustments will be based on the fitment factor, a multiplier applied to current basic pay to determine the revised salary structure.
One key component of salary revision is House Rent Allowance (HRA), which varies based on city classification (metro, urban, rural) and basic salary.
Let’s explore how HRA is calculated and what the HRA under different income slabs was under the 7th Pay Commission.
House Rent Allowance (HRA) is calculated as a fixed percentage of the basic pay, varying by the city classification where the employee is posted. The higher the basic pay, the higher the HRA amount, as it is directly linked to the employee’s salary structure. Under the 7th Pay Commission, HRA is determined as follows:
| City Classification | HRA (% of Basic Pay) |
| X Class Cities (Population ≥ 50 lakh) | 24% |
| Y Class Cities (Population 5–50 lakh) | 16% |
| Z Class Cities (Population < 5 lakh) | 8% |
Note: This HRA structure is as per the 7th Pay Commission
| Basic Pay (₹) | HRA in X Class Cities (₹) | HRA in Y Class Cities (₹) | HRA in Z Class Cities (₹) |
| 18,000 | 5,400 | 3,600 | 1,800 |
| 25,000 | 6,000 | 4,000 | 2,000 |
| 30,000 | 7,200 | 4,800 | 2,400 |
| 40,000 | 9,600 | 6,400 | 3,200 |
| 50,000 | 12,000 | 8,000 | 4,000 |
| 60,000 | 14,400 | 9,600 | 4,800 |
| 80,000 | 19,200 | 12,800 | 6,400 |
| 1,00,000 | 24,000 | 16,000 | 8,000 |
Note: This HRA structure is as per the 7th Pay Commission
The 8th Pay Commission (8CPC) is expected to be implemented in 2026. Currently, central government employees follow the 7th Pay Commission Pay Matrix, which has been in effect since January 1, 2016.
A key factor in salary revision under 8CPC will be the fitment factor, a multiplication coefficient applied to basic pay to determine revised salaries and pensions. The fitment factor plays a crucial role in adjusting salaries for inflation and cost of living, ensuring fair compensation for government employees.
The 8th Pay Commission is set to bring key revisions to salaries, pensions, and allowances, with HRA being a crucial component. As in previous pay commissions, HRA will be determined based on basic pay and city classification, ensuring fair housing support for government employees.
With implementation expected from January 1, 2026, and the fitment factor playing a major role in salary adjustments, employees can anticipate structured revisions in their compensation.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Feb 25, 2025, 1:29 PM IST
Neha Dubey
Neha Dubey is a Content Analyst with 3 years of experience in financial journalism, having written for a leading newswire agency and multiple newspapers. At Angel One, she creates daily content on finance and the economy. Neha holds a degree in Economics and a Master’s in Journalism.
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