Hard Area Allowance

Hard Area Allowance is 20 per cent of basic pay for the Nicobar group and Minicoy, and 12 per cent for the rest of Lakshadweep, on top of the Island allowance.

Updated 18 July 2026 · Reviewed by Salary-Calculator.in

Hard Area Allowance is a compensatory allowance paid to a central government employee posted in the hardest island areas, the Nicobar group of Islands and Minicoy in Lakshadweep, and the rest of the Lakshadweep islands. It is a percentage of basic pay, 20 per cent for the Nicobar group and Minicoy and 12 per cent for the rest of Lakshadweep, and it is drawn over and above the Island Special Duty Allowance for the same posting under the 7th Central Pay Commission allowance orders effective from 1 July 2017.

The defining feature of the allowance is that it stacks. Most of the location and hardship allowances are mutually exclusive: an employee posted to a difficult area draws one of them, whichever is most beneficial, not several at once. The Hard Area Allowance is the exception. It sits on top of the Island Special Duty Allowance, so an employee in the Nicobar group draws both, a combined 40 per cent of basic pay, in recognition that these are among the most isolated postings in the country.

This article sets out the allowance in full: what it compensates, the rate and the qualifying island areas, the way it combines with the Island Special Duty Allowance, the rationalisation from 25 per cent under the 6th CPC to 20 per cent under the 7th, why it rises with basic pay rather than through a dearness-allowance step-up, who is eligible, how it differs from the Special Duty Allowance and the Tough Location Allowance, and the tax position.

What the allowance compensates

A posting to the Nicobar group or to Minicoy is a posting to the far edge of the country. These are small, remote islands, days from the mainland by sea, where goods are dear, services are thin, and the isolation itself is a hardship on the employee and the family. The Hard Area Allowance exists to compensate for that hardship, so that service in the hardest island areas carries a payment that reflects how difficult they are to live and work in.

The allowance is compensatory rather than duty-linked. It is paid for being posted in the area, not for any particular hazardous task performed there, which is why every central government employee in the qualifying area draws it, whatever their cadre or the nature of their work. It is the island counterpart, at the extreme end, of the wider family of location-compensatory allowances that includes the Special Duty Allowance for the North-Eastern Region and Ladakh and the Tough Location Allowance that replaced the older remote-locality and bad-climate allowances.

The rate and the qualifying areas

The Hard Area Allowance is worked out as a percentage of basic pay, the pay drawn in the level of the pay matrix , at two rates by area:

Area	Rate
Nicobar group of Islands, and Minicoy in Lakshadweep	20 per cent of basic pay
Rest of the Lakshadweep islands	12 per cent of basic pay

The 20 per cent rate is for the hardest island areas, the Nicobar group in the Andaman and Nicobar territory and the island of Minicoy at the southern end of Lakshadweep. The 12 per cent rate covers the other Lakshadweep islands. Because the rate is a percentage of basic pay, the actual rupee amount rises with the employee’s pay level: an employee at Level 4 and an officer at Level 12 in the same Nicobar posting both draw 20 per cent, but the officer’s 20 per cent is a larger sum, since it is 20 per cent of a larger basic pay.

The Hard Area Allowance is specific to these island areas. A hard posting on the mainland does not draw it; the mainland difficult areas are covered by the Special Duty Allowance or, for remote and bad-climate locations, by a Tough Location Allowance tier. So the Hard Area Allowance is best understood as the island-specific top-up for the Nicobar group, Minicoy and the rest of Lakshadweep, not a general allowance for any hard posting.

Stacking with the Island Special Duty Allowance

The feature that sets the Hard Area Allowance apart is that it is drawn in addition to the Island Special Duty Allowance , not instead of it. The Island Special Duty Allowance is itself a percentage of basic pay, at 10, 16 or 20 per cent by how remote the island posting is, and the island order provides that it is admissible in addition to the Hard Area Allowance where the Hard Area Allowance applies. The two allowances therefore combine on the same basic pay:

Posting	Island Special Duty Allowance	Hard Area Allowance	Combined
Nicobar group	20 per cent	20 per cent	40 per cent of basic pay
Minicoy	20 per cent	20 per cent	40 per cent of basic pay
Rest of Lakshadweep (difficult areas)	16 per cent	12 per cent	28 per cent of basic pay

For the Nicobar group and Minicoy the combined figure is 40 per cent of basic pay, the Island Special Duty Allowance at its top 20 per cent rate plus the Hard Area Allowance at 20 per cent. For the rest of Lakshadweep it is the 16 per cent Island Special Duty Allowance for the difficult areas plus the 12 per cent Hard Area Allowance. These are drawn on top of the ordinary dearness allowance and house rent allowance , so an island posting can add a substantial slice to an employee’s pay.

This stacking is deliberate. The government treats the Island Special Duty Allowance as compensation for island service generally, and the Hard Area Allowance as an extra layer for the very hardest island areas within that set. Because the two answer different aspects of the same posting, the orders let them be paid together rather than forcing a choice between them, which is the opposite of the rule for the Tough Location Allowance and the Special Duty Allowance, where an employee takes only the single most beneficial allowance.

The 6th to 7th CPC rationalisation

Under the 6th Central Pay Commission the Hard Area Allowance was 25 per cent of pay for a posting in the Nicobar group and Minicoy. The 7th Central Pay Commission reviewed it as part of its general rationalisation of allowances and reduced the rate to 20 per cent of basic pay, while keeping the structure of the allowance, the qualifying areas and the rule that it is drawn on top of the Island Special Duty Allowance.

The reduction from 25 to 20 per cent tracks the Commission’s broader approach to percentage allowances, several of which it trimmed while retaining their form. The Special Duty Allowance for the North-East and Ladakh, for instance, was cut from a pre-revised 12.5 per cent to a flat 10 per cent in the same exercise. The Hard Area Allowance moved the same way, from 25 to 20 per cent for the hardest island areas, with the extension to the rest of Lakshadweep at 12 per cent bringing the wider island group into the allowance.

A percentage allowance, so no dearness-allowance step-up

Many fixed-rupee allowances under the 7th CPC rise by 25 per cent each time dearness allowance crosses a 50 per cent milestone, the mechanism that keeps a rupee-denominated allowance current. The Hard Area Allowance does not work that way, because it is not a fixed rupee amount but a percentage of basic pay.

A percentage allowance rises on its own whenever basic pay rises. An annual increment lifts basic pay by about 3 per cent, and the Hard Area Allowance, being 20 or 12 per cent of that higher basic pay, rises with it automatically. A pay fixation on promotion or a new pay commission lifts it again. So an employee’s Hard Area Allowance keeps pace with pay year by year without any separate order, and the 25-per-cent-per-50-per-cent dearness-allowance step-up simply does not apply to it, because that rule exists only to keep rupee-fixed allowances from falling behind prices.

Who gets it

Eligibility is by posting, not by grade or cadre. Any central government civilian employee posted in the qualifying island areas draws the Hard Area Allowance at the rate for the area, whatever their level in the pay matrix or the nature of their duty. A transfer into the Nicobar group, Minicoy or the rest of Lakshadweep brings the allowance with it, and a transfer out of the area ends it, because the allowance attaches to the place, not to the person.

Civilian employees paid from the Defence Services Estimates are covered on the same terms. The armed forces and the Railways operate their own parallel orders of the same period for their personnel in the same areas, issued by the Ministry of Defence and the Ministry of Railways, so a serving soldier or a railway employee in the Nicobar group draws the equivalent under their own service’s order rather than the civilian one.

How it relates to the other island and hardship allowances

The Hard Area Allowance sits within a set of location allowances, and it helps to place it against the others. The Island Special Duty Allowance is the base island allowance, 10, 16 or 20 per cent by area, and the Hard Area Allowance is the top-up that stacks on it for the hardest island areas. The Special Duty Allowance is the mainland cousin, a flat 10 per cent for the North-Eastern Region and Ladakh. The Tough Location Allowance , which absorbed the old Special Compensatory (Remote Locality) Allowance , is the fixed-rupee tiered allowance for remote and difficult locations, drawn from the Risk and Hardship Allowance matrix.

The key structural difference is the stacking rule. The Special Duty Allowance and the Tough Location Allowance are alternatives: an employee whose posting could attract both takes the single more beneficial one. The Hard Area Allowance and the Island Special Duty Allowance are cumulative: an employee whose island posting attracts both draws them together. That single difference is why a Nicobar posting is one of the better-compensated hard postings in the government, at a combined 40 per cent of basic pay before dearness and house-rent allowances.

A worked example

Take an employee at Level 7 with a basic pay of Rs. 50,000, posted in the Nicobar group. The compensatory allowances on that basic pay build up as follows:

Component	Rate	Amount (Rs.)
Island Special Duty Allowance	20 per cent of basic pay	10,000
Hard Area Allowance	20 per cent of basic pay	10,000
Combined island compensation	40 per cent of basic pay	20,000

The two island allowances together add Rs. 20,000 a month to this employee’s pay, on top of the basic pay of Rs. 50,000, the dearness allowance on that basic pay, and the house rent allowance for the area. The same employee posted instead in the difficult areas of the rest of Lakshadweep would draw the 16 per cent Island Special Duty Allowance and the 12 per cent Hard Area Allowance, a combined 28 per cent, or Rs. 14,000 on the same basic pay. And because both are percentages of basic pay, the figures rise every year with the increment without any fresh order.

Tax treatment

The Hard Area Allowance is part of salary income and is taxable in the ordinary way; there is no blanket exemption for it. The fixed exemptions under Section 10(14) of the Income-tax Act, 1961, read with Rule 2BB of the Income-tax Rules, are for certain separately notified area allowances capped at small rupee figures, and they do not cover the percentage-based Hard Area Allowance, so it is taxable even under the old regime. Under the default new regime beyond Section 115BAC, the Section 10(14) special-allowance exemptions are withdrawn altogether, so the Hard Area Allowance is fully taxable there.

Because the island allowances can add 28 to 40 per cent of basic pay to the pay packet, an employee on an island posting has a materially higher taxable salary, and should plan for the tax on the combined figure rather than assume any part of it is exempt. For the wider comparison see old versus new tax regime and income tax for central government employees .

The 8th CPC outlook

The 7th Central Pay Commission set the Hard Area Allowance at 20 per cent for the Nicobar group and Minicoy and 12 per cent for the rest of Lakshadweep, down from 25 per cent under the 6th CPC, and kept the rule that it stacks with the Island Special Duty Allowance. Whether the 8th Central Pay Commission keeps the rates, changes them, or alters the stacking rule is not known, and no figure for the allowance after the 8th CPC can be stated as fact until that commission reports and its recommendations are accepted. Until then the position is 20 per cent for the Nicobar group and Minicoy, 12 per cent for the rest of Lakshadweep, drawn in addition to the Island Special Duty Allowance.

Frequently Asked Questions (FAQs)

What is the Hard Area Allowance?

The Hard Area Allowance is a compensatory allowance paid to a central government employee for a posting in the hardest island areas, the Nicobar group of Islands and Minicoy in Lakshadweep, and the rest of the Lakshadweep islands. It is a percentage of basic pay and it is drawn over and above the Island Special Duty Allowance for the same posting, so an employee in a qualifying far-flung island area draws both allowances together, not one in place of the other.

How much is the Hard Area Allowance?

Under the 7th Central Pay Commission it is 20 per cent of basic pay for a posting in the Nicobar group of Islands and Minicoy in Lakshadweep, and 12 per cent of basic pay for a posting in the rest of the Lakshadweep islands. It is worked out on basic pay, the pay drawn in the level of the pay matrix, and it is paid in addition to the Island Special Duty Allowance for the area.

Can I draw the Hard Area Allowance and the Island Special Duty Allowance together?

Yes. This is the defining feature of the Hard Area Allowance. The Island Special Duty Allowance, at 10, 16 or 20 per cent of basic pay by area, is admissible in addition to the Hard Area Allowance where the Hard Area Allowance applies. So an employee posted in the Nicobar group draws the 20 per cent Island Special Duty Allowance and the 20 per cent Hard Area Allowance, a combined 40 per cent of basic pay, on top of the ordinary dearness and house-rent allowances.

Which areas qualify for the Hard Area Allowance?

The 20 per cent rate applies to the Nicobar group of Islands in the Andaman and Nicobar territory and to Minicoy in Lakshadweep, the most remote and difficult island postings. The 12 per cent rate applies to the rest of the Lakshadweep islands. Mainland hard postings are not covered by this allowance; they draw the Special Duty Allowance or a Tough Location Allowance instead, so the Hard Area Allowance is specific to these island areas.

Does the Hard Area Allowance rise with dearness allowance?

It rises, but not through the 25-per-cent-per-50-per-cent dearness-allowance step-up that lifts fixed-rupee allowances. Because the Hard Area Allowance is a percentage of basic pay, it goes up automatically whenever basic pay rises, through an annual increment, a pay fixation on promotion, or a new pay commission. The dearness-allowance step-up applies only to allowances fixed in rupees, not to a percentage allowance that already tracks basic pay.

What was the Hard Area Allowance under the 6th CPC?

Under the 6th Central Pay Commission the Hard Area Allowance was 25 per cent of pay for a posting in the Nicobar group of Islands and Minicoy. The 7th Central Pay Commission rationalised it to 20 per cent of basic pay, in line with its general trimming of allowance rates, while keeping the structure and the rule that it is drawn on top of the Island Special Duty Allowance.

Is the Hard Area Allowance taxable?

Yes, it is taxable as part of salary, and there is no blanket exemption for it. The small fixed exemptions for certain notified area allowances under Section 10(14) read with Rule 2BB are for different, rupee-capped allowances and do not cover the percentage-based Hard Area Allowance, so it is taxable even under the old regime. The default new regime under Section 115BAC withdraws the Section 10(14) exemptions altogether, so the allowance is fully taxable there.

Is the Hard Area Allowance the same as the Special Duty Allowance or the Tough Location Allowance?

No. The Special Duty Allowance is the flat 10 per cent allowance for the North-Eastern Region and Ladakh, and the Island Special Duty Allowance is the 10, 16 or 20 per cent allowance for the islands. The Tough Location Allowance is the fixed-rupee tiered allowance in the Risk and Hardship Matrix for remote and difficult locations. The Hard Area Allowance is a separate, island-specific allowance for the Nicobar group, Minicoy and the rest of Lakshadweep, and unlike the Tough Location Allowance it stacks with the Island Special Duty Allowance rather than being an alternative to it.

External references

References

Report of the Seventh Central Pay Commission, November 2015, Chapter 8 (Allowances): recommendation on the Hard Area Allowance for the Nicobar group of Islands and Minicoy, rationalised to 20 per cent of basic pay, and its admissibility in addition to the Island Special Duty Allowance.
Ministry of Finance, Department of Expenditure, Resolution No. 11-1/2016-IC dated 6 July 2017: Government decision on the 7th Central Pay Commission recommendations on allowances, effective 1 July 2017, including the Hard Area Allowance and the Island Special Duty Allowance.
Ministry of Finance, Department of Expenditure, Office Memorandum on the Island Special Duty Allowance No. 12/1/2017-E.II(B) dated 18 July 2017 (Island Special Duty Allowance at 10, 16 and 20 per cent of basic pay by area, admissible in addition to the Hard Area Allowance).
Ministry of Finance, Department of Expenditure, Office Memorandum on the grant of Hard Area Allowance to central government employees posted in the Nicobar group of Islands and Minicoy, and the rest of the Lakshadweep islands, 2017 (20 per cent and 12 per cent of basic pay respectively).
Income-tax Act, 1961, Section 10(14) read with Rule 2BB of the Income-tax Rules, 1962, and Section 115BAC (the new tax regime, which withdraws the Section 10(14) special-allowance exemptions).