Can the HRA be any percent of the basic/gross salary? - CiteHR
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Hello everyone. I am currently studying HR and need your help on a topic I am confused about. Can the HRA be any percent of the basic/gross salary? I mean can an employer pay say 10% or maybe 15% of the gross salary as HRA or does it have to be a minimum of 40 percent of basic pay for non-metros and 50 percent for metros.
I am so confused on this so please help. Hoping for a reply.
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Ceratin states have enacted law on HRA like Maharastra which prescribe 5% of the basic +DA. That is where one look for guidance. The second domain to look for guidance is to know how the public sector undertakings fix the hRA for various classes of employees in their organisation. Otherwise, the ideal principle to be adopted is to relate it to the avearge rental rates of accomodations of varying sizes, prevailing at a particular place since they may vary from a metro to tier-II or III cities or towns.Thus HRA varies from palce to palce and the quantum varies with the palce,industryand with the level of employee and hsi basic pay.Therefore you need to collect information about the rates prevailing of industries of your size and activity lcated in your region.There is no ahrd & fast rule.
B.Saikumar
HR & Labour Law advsior
Mumbai
Thank you Saikumar ji for your answer.
It gets difficult for me to understand some topics as I am studying through correspondence.
So what I understand from your reply is that the HRA can be any percentage of the Basic. It all depends on the company, location etc. So a company can give whatever it wants as HRA. It could be 5% - 7% - 10% - 12% - 15% - 20% - 30% - 40% and so on.
Thank you for your help.
R Kumar
Prime Sponsor - Talentedge.com "Interactive Anywhere Learning". Executive courses from top reputed institutes like IIM, XLRI, MICA. View Courses
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