A circular by the Finance Ministry stated that if a city has been upgraded on the basis of the population, then the HRA of the CG employee living there will be enhanced. The circular was issued by the Finance Ministry after the up-gradation of cities was made based on a report by the government agencies.
A city is categorized on the basis of X, Y and Z. In X category cities, the population is above 50 lakh and the HRA is 24 percent for the month. For the Y and Z category cities, the HRA is 16 and 8 percent respectively.