What is House Rent Allowance (HRA)?
House Rent Allowance (HRA) is a monthly salary component paid to Central Government employees who do not occupy government-allotted accommodation. It is meant to partly offset the cost of renting a house near your place of posting. HRA is paid as a percentage of your Basic Pay in the 7th CPC Pay Matrix, and the applicable percentage depends on how your posting city is classified — X, Y, or Z.
If you occupy government (Type) accommodation, you are not entitled to HRA — you instead pay licence fee for the quarter. HRA becomes payable only from the date you vacate government accommodation, or if none was allotted to you in the first place.
Current HRA rates (2026): 30% / 20% / 10%
Under the 7th Central Pay Commission, HRA is not fixed — it is designed to rise automatically as Dearness Allowance (DA) increases, so that the allowance keeps pace with rising rents. The Ministry of Finance Office Memorandum No. 2/5/2017-E.II(B) dated 7 July 2017 pre-notified three slabs, linked to DA crossing 25% and 50%:
| DA level | X city (30 lakh+) | Y city (5–30 lakh) | Z city (below 5 lakh) | Effective from |
|---|---|---|---|---|
| DA below 25% | 24% | 16% | 8% | 1 Jan 2016 (7th CPC start) |
| DA ≥ 25% | 27% | 18% | 9% | 1 Jul 2021 |
| DA ≥ 50% (current) | 30% | 20% | 10% | 1 Jan 2024 |
Dearness Allowance for Central Government employees stood at 60% as of January 2026, well past the 50% threshold — so all employees are currently on the highest HRA slab: 30% for X, 20% for Y, and 10% for Z class cities. This is the rate this calculator uses by default. No fresh order is required each time DA crosses a threshold — the revision is pre-notified and takes effect automatically from the date DA touches the limit.
City classification (X / Y / Z)
City classification for HRA is based on the population of the urban agglomeration, as certified by the Finance Ministry from Census data:
| Class | Population criterion | Examples | HRA rate |
|---|---|---|---|
| X | 50 lakh and above | Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune | 30% |
| Y | 5 lakh to 50 lakh | Jaipur, Lucknow, Kanpur, Nagpur, Patna, Surat, Chandigarh, Coimbatore, Kochi, Indore, Bhopal | 20% |
| Z | Below 5 lakh | All other towns and rural postings | 10% |
Your city class is fixed at your place of posting, not your home town. If you are transferred, your HRA class changes from the date you join the new duty station.
Minimum HRA floor
Because HRA is a percentage of Basic Pay, employees at the lowest pay levels could otherwise receive a very small amount. The 7th CPC therefore prescribed a minimum floor, calculated at 30%/20%/10% of the minimum Basic Pay of ₹18,000:
| City class | Minimum HRA (₹/month) |
|---|---|
| X | ₹5,400 |
| Y | ₹3,600 |
| Z | ₹1,800 |
You receive whichever is higher: the percentage-based HRA on your actual Basic Pay, or the applicable floor amount.
What counts as "Basic Pay" for HRA
For HRA purposes, Basic Pay means the pay drawn in the applicable Level of the 7th CPC Pay Matrix. It does not include Dearness Allowance, Transport Allowance, or other allowances — HRA is calculated purely on Basic Pay, unlike some private-sector HRA formulas that use Basic + DA.
Worked example
HRA = ₹58,300 × 30% = ₹17,490 per month
Annual HRA = ₹17,490 × 12 = ₹2,09,880
HRA and income tax exemption
The HRA your office pays you (as calculated above) is a separate matter from the income-tax exemption on HRA under Section 10(13A) of the Income Tax Act. The tax exemption is available only if you opt for the Old Tax Regime and actually pay rent, and it is the lowest of three amounts: actual HRA received, rent paid minus 10% of Basic+DA, or 50%/40% of Basic+DA (metro/non-metro). This calculator estimates the HRA your office pays; for the tax-exempt portion, use our Income Tax Regime Calculator.
What happens when the 8th CPC is implemented
The 8th Central Pay Commission was constituted in November 2025 and is expected to take effect from a reference date of 1 January 2026, though actual implementation typically lags by several months to a year based on past pay commission timelines. When a new pay commission is implemented, DA conventionally resets to zero, and HRA is expected to revert to a base rate (historically around 24%/16%/8%) applied on the new, higher Basic Pay under the revised Pay Matrix — before beginning its own climb again as DA increases. Until the 8th CPC's HRA structure and Pay Matrix are formally notified, the current 7th CPC rates of 30%/20%/10% continue to apply. We will update this calculator as soon as the 8th CPC HRA order is issued.