Hard Area Allowance

Hard Area Allowance is 20% of basic pay for a central government employee posted in the Nicobar group of Islands and at Minicoy, and 12% of basic pay for a posting at Kiltan, Andrott, Kalpeni, Chetlat, Kadmat, Amini or Bithra in Lakshadweep. Department of Expenditure Office Memorandum No. 13/1/2017-E.II(B) dated 14 July 2017 fixes both rates, in supersession of all earlier orders on the subject, with effect from 1 July 2017.

The allowance is best known for one feature: it stacks. Paragraph 4 of that order makes it admissible in addition to the Island Special Duty Allowance, so a posting in the Nicobar group draws 20% under each order, a combined 40% of basic pay. Most location allowances in the central government are alternatives to one another. This pair is not.

Two islands that most summaries include are excluded. Kavaratti and Agatti, the capital-town islands of Lakshadweep, are named out of the entitlement in the subject line of the order itself and appear nowhere in its rate table, so an employee posted there draws the 10% Island Special Duty Allowance and no Hard Area Allowance. The whole Andaman group is outside the allowance too, Port Blair and Little Andaman alike; only the Nicobar group qualifies.

This article sets out the two rates and the islands each covers, the islands that draw nothing, what basic pay means for the calculation, how the allowance combines with the Island Special Duty Allowance, the election under paragraph 3 against the Tough Location Allowance, what the 7th Central Pay Commission recommended and where the implementing order departed from it, why no dearness-allowance escalator applies, what leave and suspension do to it, why it adds nothing to a pension, who administers it for railway and defence personnel, worked examples at three postings, the tax position under the Income-tax Act, 2025, and what the 8th Central Pay Commission does and does not settle.

Rates and the islands each rate covers

Office Memorandum No. 13/1/2017-E.II(B) dated 14 July 2017 fixes two rates of Hard Area Allowance, both as a percentage of basic pay, and names the islands in each band.

The order is short. Seven paragraphs cover the rate table, the meaning of basic pay, the election where more than one special compensatory allowance is admissible, the addition to the Island Special Duty Allowance, the effective date of 1 July 2017, the position of civilian employees paid from the Defence Services Estimates, and the concurrence of the Comptroller and Auditor General for the Indian Audit and Accounts Department. It was signed by a Deputy Secretary in the Department of Expenditure and issued to all ministries on the standard distribution list.

Because both rates are percentages, the rupee value of the allowance is decided by the pay matrix cell the employee occupies. An assistant at Level 4 and a director at Level 12 in the same Nicobar posting draw the same 20%, but the director’s 20% is the larger sum. The allowance therefore needs no revision order of its own: it moves with basic pay.

The islands and stations that draw nothing

Three sets of island postings carry no Hard Area Allowance at all, and the exclusions are as important as the entitlements.

Kavaratti and Agatti are excluded by name. The subject line of Office Memorandum No. 13/1/2017-E.II(B) reads “Islands of Union Territory of Lakshadweep other than Kavaratti & Agatti”, and neither island is listed in the rate table. These are the administrative and air-link centres of the territory, treated as capital-town areas for island pay purposes, and an employee posted there draws the Island Special Duty Allowance at 10% of basic pay and nothing under the Hard Area Allowance order.

The Andaman islands are outside the allowance entirely, except the Nicobar group. Port Blair, North and Middle Andaman, South Andaman, Little Andaman, Narcondam and East Island are all named in the Island Special Duty Allowance order of 18 July 2017, at 10%, 16% or 20% by area, but none of them appears in the Hard Area Allowance rate table. A posting to Little Andaman draws 20% under the island order and no Hard Area Allowance, while a posting to Car Nicobar draws 20% under both.

Mainland hard postings are a different scheme altogether. A difficult station on the mainland is compensated through the Special Duty Allowance for the North-Eastern Region and Ladakh, or through a Tough Location Allowance tier drawn from the Risk and Hardship Allowance matrix, and never through the Hard Area Allowance, which names islands and only islands.

What basic pay means for the calculation

Paragraph 2 of Office Memorandum No. 13/1/2017-E.II(B) defines the base narrowly: basic pay in the revised pay structure means the pay drawn in the prescribed Level in the pay matrix, and does not include any other type of pay such as special pay.

Three consequences follow. Dearness allowance is not part of the base, so the 20% and the 12% are worked out on the matrix cell before dearness allowance at 60% is added, not on pay plus dearness allowance. Military Service Pay, non-practising allowance and any other pay element are outside the base by the same words. And the Hard Area Allowance itself is not basic pay, so it does not enlarge house rent allowance, the dearness allowance, or the next Hard Area Allowance computation.

The base is the same one used by the Island Special Duty Allowance order, which repeats the definition word for word in its own paragraph 2. That is why the two percentages can simply be added: they run on an identical figure.

Stacking with the Island Special Duty Allowance

Paragraph 4 of Office Memorandum No. 13/1/2017-E.II(B) dated 14 July 2017 states that the Hard Area Allowance is admissible in addition to the Island Special Duty Allowance, where admissible. Paragraph 4 of Office Memorandum No. 12/1/2017-E.II(B) dated 18 July 2017 states the reciprocal, that the Island Special Duty Allowance is admissible in addition to the Hard Area Allowance. Each order carries the rule, which is why the entitlement survives an audit objection raised under either one.

The island order fixes three rates by area: 10% of basic pay within 8 km of the municipal limits of the capital towns, meaning Port Blair, Kavaratti and Agatti; 16% in the difficult areas, meaning North and Middle Andaman, South Andaman excluding Port Blair, and all islands in Lakshadweep except Kavaratti, Agatti and Minicoy; and 20% in the more difficult areas, meaning Little Andaman, the Nicobar group, Narcondam, East Island and Minicoy. Laid against the Hard Area Allowance table, the combinations are these.

The 16% band of the island order and the 12% band of the Hard Area Allowance order describe the same seven islands from opposite directions. The island order reaches them by subtraction, all of Lakshadweep except Kavaratti, Agatti and Minicoy; the Hard Area Allowance order reaches them by list. The two definitions coincide exactly, so every Lakshadweep island except the three named draws a combined 28%.

The election under paragraph 3 against Tough Location Allowance

Paragraph 3 of Office Memorandum No. 13/1/2017-E.II(B) provides that in places where more than one special compensatory allowance is admissible, the employee has the option to choose the allowance which benefits them the most, that is, the Hard Area Allowance or one of the special compensatory allowances subsumed under Tough Location Allowance Category I, II and III.

The scope of that election is narrow and is regularly misread. It runs between the Hard Area Allowance and the Tough Location Allowance family, the tiers that absorbed the old Special Compensatory (Remote Locality) Allowance, the Bad Climate Allowance and their siblings. It does not run against the Island Special Duty Allowance, which paragraph 4 of the same order expressly adds on top. An employee who is told to elect between the Hard Area Allowance and the island allowance is being told something the order does not say.

The arithmetic usually settles the election in one line. Tough Location Allowance tiers are fixed rupee amounts from the Risk and Hardship matrix, running in the low thousands a month, while 20% of a Level 7 basic pay of Rs. 50,000 is Rs. 10,000. Paragraph 9 of Office Memorandum No. 3/1/2017-E.II(B) dated 19 July 2017, the Tough Location Allowance order, records the same option from the other side.

What the 7th Central Pay Commission recommended, and what the order did

Paragraph 8.17.57 of the 7th Central Pay Commission report records the pre-2016 position: Hard Area Allowance at 25% of basic pay, granted to central government employees on posting to the Nicobar and Lakshadweep groups of Islands, paid in addition to the Island Special Duty Allowance, with demands pending to increase it. Paragraph 8.17.58 gives the recommendation in a single sentence, that in line with the treatment of percentage-based allowances the Hard Area Allowance should be rationalised by a factor of 0.8 to 20% of basic pay. Serial number 74 of the Commission’s summary table of allowances records the outcome as “Retained. Rationalized by a factor of 0.8.”

The 0.8 factor was general, not specific to the islands. Item 4 of paragraph 8.2.5 explains it: because the pay structure and therefore basic pay rose under the new matrix, and having regard to the raise granted to slab-based allowances, the quantum of every percentage-based allowance was rationalised by a factor of 0.8. The Island Special Duty Allowance went through the same reduction at paragraph 8.17.66, from 12.5%, 20% and 25% to 10%, 16% and 20%, and house rent allowance went from 30%, 20% and 10% to 24%, 16% and 8% by the same logic.

The implementing order did not follow the recommendation exactly. Paragraph 8.17.58 proposed one rate of 20% for the whole entitlement. Office Memorandum No. 13/1/2017-E.II(B) fixed two, 20% for the Nicobar group and Minicoy and 12% for the seven other Lakshadweep islands, and dropped Kavaratti and Agatti out of the allowance in the subject line. A two-band structure that the Commission’s own text does not describe therefore governs the entitlement today, which is why the report alone is an unsafe guide to what an employee actually draws.

Why no dearness-allowance escalator applies

Paragraph 8.2.4 of the 7th Central Pay Commission report sorts allowances into four groups by how they are administered: fully DA-indexed fixed amounts such as transport allowance; partially indexed fixed amounts, which rise by 25% each time dearness allowance rises by 50%, the examples given being Field Area Allowance and Siachen Allowance; fixed amounts with no indexation; and percentage-based allowances paid as a percentage of basic pay.

The Hard Area Allowance sits in the fourth group, so the 25% escalator that fired on 1 January 2024 for the matrix allowances never applies to it. It does not need to. A percentage of basic pay rises whenever basic pay rises, which happens with every annual increment of 3%, every pay fixation on promotion, and every pay commission revision.

The practical difference is in the pattern of increase, not the direction. A Tough Location Allowance tier stays flat in rupees for years and then jumps 25% on a dearness-allowance milestone. The Hard Area Allowance rises by about 3% every July on the increment date, and by a step on promotion, so an employee who spends five years at Kadmat sees the allowance grow every year without a single fresh order being issued.

Effect of leave, tour, training and suspension

Office Memorandum No. 13/1/2017-E.II(B) fixes no leave, tour or training condition. Its seven paragraphs cover the rates, the meaning of basic pay, the paragraph 3 election, the addition to the Island Special Duty Allowance, the effective date, defence civilians and the audit concurrence, and it supersedes all existing orders on the subject, so no earlier condition of admissibility survives underneath it.

The Island Special Duty Allowance order is drafted differently, and the contrast matters at an island station where both are drawn. Paragraph 3 of Office Memorandum No. 12/1/2017-E.II(B) dated 18 July 2017 provides that the island allowance is not admissible during periods of leave, training or tour beyond full calendar month or months where the employee is outside the Andaman and Nicobar group and the Lakshadweep islands, and that it is not admissible during suspension and joining time. An employee on three months of leave outside the islands therefore loses the island allowance for the full calendar months of that absence under an express clause, while the Hard Area Allowance order contains no equivalent provision.

Suspension is governed by the general rule rather than the allowance order. Fundamental Rule 53 grants a suspended government servant subsistence allowance, dearness allowance on it, and other compensatory allowances subject to the fulfilment of the other conditions laid down for the drawal of those allowances. A compensatory allowance attaching to a posting is drawn while the posting is held and the duty is performed, so the entitlement follows the posting rather than the person, and a transfer out of the qualifying island ends it from the date of relief.

Reckonability for pension, gratuity and the NPS contribution

The Hard Area Allowance counts for none of the three, so twenty years in the Nicobar group adds nothing to the retirement outcome beyond what the pay level itself carries.

Rule 31 of the CCS (Pension) Rules, 2021 defines emoluments for pension as the basic pay drawn under the Fundamental Rules immediately before retirement or death, plus non-practising allowance granted to a medical officer in lieu of private practice, with stagnation increment added by the Explanation. No compensatory allowance enters that definition, and rule 32 computes average emoluments over the last ten months on the same base. Retirement gratuity adds exactly one item, the dearness allowance admissible on the date of retirement or death.

The contributory schemes use the same narrow base. Rule 5(1) of the CCS (Implementation of National Pension System) Rules, 2021, notified by G.S.R. 227(E) dated 30 March 2021, limits the contribution base to basic pay, non-practising allowance and admissible dearness allowance in a calendar month, and the Unified Pension Scheme runs on the same base as the National Pension System. An employee at Level 7 drawing Rs. 10,000 a month in Hard Area Allowance carries none of it into the corpus.

Who administers it, and under which order

The Department of Expenditure administers the civilian entitlement through Office Memorandum No. 13/1/2017-E.II(B) dated 14 July 2017, which applies to all ministries and departments on the standard distribution list.

Paragraph 6 extends the same order to civilian employees paid from the Defence Services Estimates, with the expenditure charged to the relevant head of those estimates, and leaves armed forces personnel and railway employees to separate orders of the Ministry of Defence and the Ministry of Railways. The Railway Board issued its version as letter No. F(E)I/2017/AL-4/7 dated 16 August 2017, circulated as RBE No. 95/2017 and PC-VII No. 41, carrying the same two rates of 20% and 12% and the same effective date of 1 July 2017.

Paragraph 7 records that for employees of the Indian Audit and Accounts Department the order was issued with the concurrence of the Comptroller and Auditor General of India, the constitutional requirement for any order touching the service conditions of that department. State government employees posted in the territories draw whatever their own state prescribes; a central order carries no entitlement across, and an employee on deputation draws the central allowance for the period of the central posting.

Worked examples at three postings

Take an employee at Level 7 with a basic pay of Rs. 50,000, posted at Car Nicobar in the Nicobar group.

The two island allowances add Rs. 20,000 a month, on top of the basic pay itself, the dearness allowance on that basic pay, and the house rent allowance for the station.

Move the same employee to Kadmat and the figures change on both lines: the island allowance falls to the 16% difficult-area rate, Rs. 8,000, and the Hard Area Allowance to 12%, Rs. 6,000, a combined Rs. 14,000 or 28% of basic pay. Move an officer at Level 12 with a basic pay of Rs. 90,000 to Kavaratti and the Hard Area Allowance disappears altogether: the entitlement is the 10% island allowance, Rs. 9,000, and nothing more, because Kavaratti is excluded by the subject line of the order. The Level 7 employee at Car Nicobar draws Rs. 20,000 in island allowances while the Level 12 officer at Kavaratti draws Rs. 9,000, which is the clearest illustration that the station decides the entitlement before the pay level does.

Distinction from the neighbouring location allowances

Four allowances cover difficult postings and only one of them stacks.

The structural point is that the Hard Area Allowance and the Island Special Duty Allowance answer different questions about the same posting. The island allowance compensates island service as such, at a rate graded by how far the station is from the capital town. The Hard Area Allowance compensates the hardship of the specific islands the government treats as hardest, and is added rather than substituted, which is why a Nicobar posting at 40% of basic pay is the best-compensated hardship posting available to a central government civilian.

Tax treatment

The Hard Area Allowance is taxable as salary in full, under the default regime and the old regime alike. For the tax year 2026-27 the governing law is the Income-tax Act, 2025 (Act No. 30 of 2025), in force from 1 April 2026, whose Schedule III carries the prescribed-allowance exemptions formerly in Section 10(14) of the repealed Income-tax Act, 1961, read with the Income-tax Rules, 2026 notified by Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026.

No entry in that scheme names the Hard Area Allowance, and none named it under Rule 2BB of the repealed Income-tax Rules, 1962 either. The nearest entry is the island duty allowance exemption of Rs. 3,250 a month for the Andaman and Nicobar Islands and Lakshadweep, which is confined by its own words to members of the armed forces and reaches no civilian employee. Under the default regime the question does not arise: Section 202 leaves a new-regime assessee only the travel, daily and conveyance allowances and the transport allowance for a disabled employee, so every prescribed-allowance exemption is withdrawn.

The tax cost is proportionate to the entitlement, which is the point worth planning for. An employee at Level 7 in the Nicobar group adds Rs. 2,40,000 a year of fully taxable salary through the two island allowances, and at Kadmat the addition is Rs. 1,68,000. For the comparison across regimes see old versus new tax regime and income tax for central government employees.

Bearing on the 8th Central Pay Commission

The rates in force are those of 14 July 2017 and nothing has superseded them. The 8th Central Pay Commission will review the whole allowance structure, and the treatment of percentage-based allowances is the variable that decides this one: the 7th Commission applied a factor of 0.8 to every percentage allowance because the matrix had raised basic pay, and a similar rationalisation would again cut the headline percentage while leaving the rupee amount higher.

No figure for the Hard Area Allowance after the 8th Central Pay Commission can be stated as fact. The Commission has not reported, no recommendation on this allowance exists, and the two questions that matter for the islands, whether the two-band structure survives and whether paragraph 4 continues to allow the allowance on top of the Island Special Duty Allowance, are open. Until an implementing order says otherwise the entitlement is 20% and 12% of basic pay, drawn in addition to the island allowance.

Related Articles

• Island special duty allowance
• Special Duty Allowance
• Special Compensatory (Remote Locality) Allowance
• Tough Location Allowance
• Bad Climate Allowance
• Risk and Hardship Allowance
• Allowances for central government employees
• Dearness allowance
• House rent allowance
• Transport allowance
• Travelling allowance
• Basic pay
• Pay matrix
• Annual increment
• Pay fixation
• Military Service Pay
• Defence pay matrix
• Suspension
• CCS (Leave) Rules
• CCS (Pension) Rules 2021
• Central government pension
• Gratuity for central government employees
• National Pension System
• Unified Pension Scheme
• Take-home salary for central government employees
• Income tax for government employees
• Old versus new tax regime
• Income-tax Act 2025
• Department of Expenditure
• 7th Central Pay Commission
• 8th Central Pay Commission
• Central government employees in India
• Salary by pay level
• Central Armed Police Forces
• 7th CPC salary calculator

External references

• Hard Area Allowance order, Department of Expenditure
• Department of Expenditure circulars: allowances for the North-Eastern Region and other special areas
• Island Special Duty Allowance order, Department of Expenditure
• Report of the 7th Central Pay Commission, Department of Expenditure
• Department of Expenditure, Ministry of Finance
• Income Tax Department

References

1. Ministry of Finance, Department of Expenditure, Office Memorandum No. 13/1/2017-E.II(B) dated 14 July 2017: grant of Hard Area Allowance to central government employees posted in the Nicobar group of Islands and islands of the Union Territory of Lakshadweep other than Kavaratti and Agatti, at 20% and 12% of basic pay, effective 1 July 2017.
2. Ministry of Finance, Department of Expenditure, Office Memorandum No. 12/1/2017-E.II(B) dated 18 July 2017: Island Special Duty Allowance at 10%, 16% and 20% of basic pay by area, paragraph 3 on leave, training, tour, suspension and joining time, and paragraph 4 on admissibility in addition to the Hard Area Allowance.
3. Ministry of Finance, Department of Expenditure, Office Memorandum No. 3/1/2017-E.II(B) dated 19 July 2017: Tough Location Allowance rates, and paragraph 9 on the option involving the Hard Area Allowance and the Island Special Duty Allowance.
4. Report of the Seventh Central Pay Commission, November 2015: paragraph 8.2.4 (the four ways allowances are administered), paragraph 8.2.5 item 4 (rationalisation of percentage-based allowances by a factor of 0.8), paragraphs 8.17.57 and 8.17.58 (Hard Area Allowance), paragraph 8.17.66 (Island Special Duty Allowance) and serial number 74 of the summary table of allowances.
5. Ministry of Finance, Department of Expenditure, Resolution No. 11-1/2016-IC dated 6 July 2017: government decisions on the 7th Central Pay Commission recommendations on allowances, effective 1 July 2017.
6. Railway Board letter No. F(E)I/2017/AL-4/7 dated 16 August 2017 (RBE No. 95/2017, PC-VII No. 41): Hard Area Allowance for railway employees at 20% and 12% of basic pay, effective 1 July 2017.
7. CCS (Pension) Rules, 2021, rules 31 and 32 (emoluments and average emoluments); CCS (Implementation of National Pension System) Rules, 2021, notified by G.S.R. 227(E) dated 30 March 2021, rule 5(1) (contribution base).
8. Fundamental Rule 53 (pay and allowances of a government servant under suspension).
9. Income-tax Act, 2025 (Act No. 30 of 2025), in force 1 April 2026, Section 202 and Schedule III (prescribed allowances), the successor to Section 10(14) of the repealed Income-tax Act, 1961; and Central Board of Direct Taxes Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026, notifying the Income-tax Rules, 2026.