Classification of Indian cities

The classification of Indian cities is a ranking system used by the Government of India to allocate House Rent Allowance (HRA) to public servants employed in different cities in India. HRA is also used by the Indian Revenue Service (IRS) to provide income tax exemptions. Cities are classified on the basis of their population, as recommended by the Sixth Central Pay Commission in 2008 and the Reserve Bank of India, respectively.

Before the Sixth Central Pay Commission, the classification of cities in India was based on two parameters: Compensatory City Allowance (CCA), further divided into categories A-1, A, B-1 and B-2, and HRA, further divided into categories A-1, A, B-1, B-2 and C.

Under the recommendation of the Sixth Central Pay Commission, the CCA classification was abolished in 2008. The earlier HRA classification of cities was changed from A-1 to X, A, B-1 and B-2 to Y and C and unclassified cities to Z. X, Y and Z are more commonly known as Tier-1, Tier-2 and Tier-3 cities respectively.

On the basis of the census 2011, two cities — Pune and Ahmedabad — have been upgraded to 'X' class from 'Y' and 21 cities to 'Y' from 'Z' for the purpose of HRA effective from 1 April 2014.

The cities were classified as follows before the Sixth Central Pay Commission's recommendations were followed in 2008. This classification was initially based on the recommendations of the Fifth Central Pay Commission of India in 1997. Chennai, New Delhi, Kolkata and Mumbai were classified as A-1 cities. City statuses were later revised based on the results of the 2001 Census of India. Hyderabad was accorded the A1 status on 31 August 2007, and Bangalore on 21 September 2007. CCA classification was abolished in 2008.

The Reserve Bank of India (RBI) classifies centres into six tiers based on population. The tables below shows the classification.

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