8th Pay Commission: These days, the eyes of about 55 lakh serving employees and 69 lakh pensioners of the Central Government are fixed on the 8th Pay Commission. There is only one question in everyone’s mind that how much salary will come in their account after the implementation of the new system. ‘Fitment factor’ plays the most important role in this entire process. This is the scale that decides your new basic pay under the pay matrix. As soon as the basic pay increases, all the other allowances related to it including House Rent Allowance (HRA) automatically increase. At present the 8th Pay Commission is in consultation with all the stakeholders.
Fitment factor is the basis of salary, this is how the basic salary will change
There is a demand from the unions to keep the fitment factor from 2 to 5 times. At the same time, the government is assessing its capacity to bear the financial burden of increased salary, pension and arrears. Till the final decision is taken, it can be understood through different scenarios how much change can happen in the basic pay.
For example, if we consider an employee in pay-level 4, whose current basic pay is Rs 25,500, his salary calculation will completely change when different fitment factors are applied:
- 2 times fitment factor: The revised basic pay will be Rs 51,000 per month.
- 2.5 times fitment factor: Basic pay will increase to Rs 63,750.
- 3 times fitment factor: This figure will reach Rs 76,500 per month.
These figures are indicative at present. The final increase will depend on what the commission recommends which is approved by the government.
Increase in basic pay will increase HRA
Along with basic pay, allowances also play an important role in the salary structure. House rent allowance i.e. HRA is a standard part of salary. Since it is calculated on the basis of percentage of basic pay, as the basic pay increases, the graph of HRA also goes up. Under the 7th Pay Commission rules, the HRA of central employees depends on their pay level as well as the city category (X, Y, Z). Employees posted in Class X cities get the highest HRA compared to Class Y or Z cities.
Allowance will decide the category of cities
Let us understand this with an example. Suppose the existing HRA slabs of 30%, 20% and 10% are continued. The basic salary of a pay-level 4 employee becomes Rs 51,000 with 2 times the fitment factor. In such a situation, the calculation of allowance will also change according to the city:
- 30% HRA (X category city): Rs 15,300 per month
- 20% HRA (Y category city): Rs 10,200 per month
- 10% HRA (Z category city): Rs 5,100 per month
Although the fitment factor does not directly apply to HRA, it increases the basic pay on which this allowance is calculated. According to Adil Shetty, CEO of BankBazaar, even a small change in the multiplier (fitment factor) can significantly impact the salary at every pay level. This also has a direct impact on other benefits like HRA related to basic pay.
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