8th Pay Commission: Up to ₹27.5 lakh low-interest advance in 7th CPC — Is there a case for a hike?

3 min read | Updated on May 20, 2025, 07:51 IST

SUMMARY

In the 8th Pay Commission, employees will be hoping for a hike in interest-bearing advances. More so because the cost of purchasing a house and a PC has multiplied significantly in the last 10 years.

8th pay commission, loan advance in 8th CPC

Employees currently get HBA and PC advance as per the 7th CPC's recommendations. | Image source: Shutterstock

As the 8th Pay Commission continues to take shape, all eyes of employees and various stakeholders are on expected salary hikes and the fitment factor. But a pay commission is not only about salaries. It's also about various perks and facilities that employees get during their employment.

Central Government employees get various interest-bearing advances, or loans, for specified purposes at very low interest rates during their service period. Earlier, they used to get many interest-free advances. The 7th Pay Commission abolished them but retained two interest-bearing advances.

The Employees can now get up to a combined ₹27.5 lakh as low-interest loans in the form of interest-bearing advances during their working years. These advances are the following:

House Building Advance: The interest rate for HBA is currently just 7.5%. One can get up to ₹25 lakh or 34 times Basic Pay or the anticipated price of the house, whichever is the least, as HBA.

PC Advance: This loan is for purchasing personal computers. Employees can get up to ₹50,000 or the actual price of the PC, whichever is lower, as a one-time advance to buy a PC. This advance is allowed up to five times in the entire service, which means employees can get up to ₹2.5 lakh as an advance for a PC during their work years. Currently, the interest rate for PC advance is 9.1%.

Thus, Central Government employees can get up to ₹27.5 lakh as interest-bearing advance during their service years.

Is there a case for a hike in these advances?

In the 8th Pay Commission, employees will be hoping for a hike in these advances. More so because the cost of purchasing a house and a PC has multiplied significantly in the last 10 years. It's not possible to buy or construct a good house for less than ₹50 lakh these days.

In bigger cities like Mumbai, even ₹1 crore is a small amount to get a decent house. Similarly, buying a good PC with just ₹50,000 has become almost impossible these days. Employees will therefore be hoping for suitable hikes in these advances in the 8th Pay Commission.

Between the 6th and 7th CPCs, the HBA maximum limit increased by around 233% from just ₹7.5 lakh to ₹25 lakh, while a PC advance was reduced from ₹80,000 on the first occasion and ₹75,000 subsequently to ₹50,000. But the 7th CPC allowed PC advance for a maximum of five times.