Can Companies Cut HRA from Salaries Without Employee Consent? Let's Discuss

Hi,

I just want to understand whether a company can remove the HRA part from their employees' salary without their consent or not.

Thanks,
Ajay

No, an employer cannot remove HRA from their salary. Only employees who own a home can have it removed with their consent and it should be shown as a part of their pay in other allowances, especially those who live in rented houses. In such cases, HRA is applicable as per the law.

Dear Valbooj,

No HRA is defined as a statutory component in any law, even for an employee who does not own a house. Hence, the employer can remove the HRA from CTC with the consent of the employee or without the consent of the employee. If you still think HRA is a mandatory component for those employees who are residing in rental properties, please provide any case law or section in which HRA is defined as a statutory component for employees who do not own a house.

Best Regards,
Devesh Chauhan

I beg to differ. There is a specific act in Maharashtra for the payment of House Rent Allowance Act, which specifies the percentage. Please go through the same and be guided.

Hi,

I would like to add a case of Maharashtra, on which you also can shed some light.

In Maharashtra, HRA is applicable to a minimum of 50 or more employees as per the Maharashtra Workmen's Minimum House Rent Allowance Act, 1983.

Best regards,
Susheel Soneji

Dear All,

No salary components or any terms of appointment, either service conditions or pay components, may be withdrawn unless it is communicated to the concerned set of workers and done by mutual agreements and consent. Otherwise, it may lead to and create industrial disputes.

Thank you.

HRA in CTC and Its Implications

HRA is mandatory in CTC where it is part of the Minimum Wages Structure; otherwise, it can be avoided. However, the other major point is that if HRA is not reflected in the salary, the "HRA Exemption" can't be taken up to the maximum permissible limit for computing Income Tax. If HRA is not part of CTC, an exemption can still be taken, but it is restricted to a certain amount (maybe 60k per annum). For more details, please refer to the HRA exemption of the IT Act. Since PF is not applicable to HRA, it is advisable to show it in the salary structure. Experienced members can correct me.

Regards

Understanding the Importance of HRA in Salary Structure

Pan Singh is absolutely right. There are states like Maharashtra, West Bengal, and possibly others where the House Rent Allowance Act is applicable. In the case of West Bengal, it is a minimum of 5% of Basic and DA. Therefore, it is unavoidable in those states. Moreover, for higher bracket salaried employees, as per the IT Act, there is a scope for good exemption for those residing in rental houses. HRA is also exempted from PF. Under the Minimum Wages Act, HRA is also a component.

Considering all the above factors, it is always better to have HRA as a component of CTC. There are MNCs today where for management staff, the salary structure consists only of Basic and HRA - no other component. We should remember that the CTC structure approach may be a compliance of law as well as convenient for employees without any additional cost to the employer.

Thanks and regards,

S K Bandyopadhyay
USD HR Solutions
[Email Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

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Salary/wages cannot be reduced from the total agreed amount. HRA or any component of CTC cannot be legally reduced or removed. The letter of appointment, wage settlement, or practice of making HRA payment all in favor of employees shall entail your action for a claim of ten times penalty, along with the recovery of money as earned wages.

Assume if it is doable, then how can anybody live, protect family, and oneself from others keeping wealth?

Regards,
RDS Yadav
LABOUR LAW ADVISOR
navtaranghrs@gmail.com