7th Pay Commission Update: Low-interest House Building Advances (HBA) that are provided to Central Government employees is currently charged interest at a 7.1% rate. The Ministry of Housing & Urban Affairs reduced the interest rate on HBA to 7.1% through March 31 of 2023 by an office memo dated April 1, 2022.
Center to raise interest rates on HBA in March
The Center, however, is expected to raise the interest rates on HBA beginning with the new fiscal year. Employees of the Central Government are given access to the HBA facility in accordance with the recommendations of the 7th Pay Commission.
In accordance with HBA regulations, Central Government employees are qualified to receive interest-bearing advances for a variety of purposes, including the construction of a new home, the purchase of a home's plot, the expansion of a home, and the purchase of pre-built homes or apartments from housing boards, development authorities, registered builders, etc.
HBA can be used to repay loans or advances obtained from the government, HUDCO, or private parties even after the building is being constructed.
Central Government Employees are entitled to up to 34 months of basic pay with an HBA ceiling of Rs 25 lakh, as per the 2017 House Building Advance Rules (HBA).
If the cost of the house or flat is less than Rs 25 lakh, the employee will only be eligible for the lowest amount as HBA. HBA can also be used to add to a current house. According to this clause, employees are eligible for 34 months of basic pay up to a maximum of Rs 10 lakh or the full cost of expansion up to a maximum of Rs 10 lakh.
The following is the minimum amount of house building advance (HBA) that Central Government Employees are eligible to receive, per the recommendations of the 7th Pay Commission:
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34 times the basic pay
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whichever is lower: Rs. 25 lakh or the projected price of the house
The commission had suggested that the minimum number of years of continuous service needed to qualify for HBA be lowered to five.
