jaiwardhan Started The Discussion:
Hi ,
I have a few questions regarding the city compensatory allowance.

1.Is there a limit or a percentage for the CCA in metros and other cities?

2.If there is no limits what should be the way to calculate the CCA?

3.If dearness allowance is bieng paid then should the CCA be paid or only one of them is sufficient.

Hoping for prompt replies.
Thanking you
Jaiwardhan Singh
City Compensatory Allowance is paid to compensate cost of living in the city. Dearness Allowance is also a kind of compensation but it takes in to account the general cost of living, defenitely variable according to grades of city. Normally, CCA will be equal to all employees right from the Manager to Sweeper barring some exceptions where comapnies may have different CCAs to different categories of employees. That is why CCA is not calculated as percentage of Basic but paid as a fixed amount whereas DA (except Industrial Variable DA) is paid as percentage of Basic Salary.
The amount of CCA to be paid depends on company's policy and there is no legislative ruling in this regard except the taxability.


Dear Madhu,

Can you send me a sample CCA for maximum number of cities in India. I have branches all over the country and need to start City Compensatory Allowance for all our employees. You may email me at

A. Pinto
Hi Madhu,

Thanks for this information. I want to know whether this allowance is taxable or not. If not what is the maximum limit.

I have read many of your postings. Its always very organized & informative.

Dear Madhu, pls send me more details on CCA & amount of CCA applicable across India at dew.sihag@gmail.com regards, Darshna Sihag
I regret to say that I do not have any ready made information about the amount of CCA throughout India. It is purely a matter depended on the company's policy about categorisation of city by the company. Therefore, two different companies may have two different CCA to the employees posted in the same city.


Hi Mr. Madhu, I want to know is that, If the CCA is equal to DA, So, PF is applicable on that, & what is the maximum limit of the same. Regards,
CCA is DA. Both are different items. When DA reflects the actual cost of living index, the CCA need not necessarily change according to CPI. Normally, it will be fixed and it is given to 'compensate' additional expenses (only to an extent) involved in the city life. Therefore, it will not attract PF.


hi madhu can u plz provide formula for calculation of Dearness Allowance (including cpi calculation).
Mr. Bharat,

I am unable to find the relevant link concerning your query. Would like to tell you that you can access the required information if you check all the post of Madhu T K Sir. Once I came across that in his posts.


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