POLICY ON HOUSING BENEFITS To bring rational equitability in benefits in 3 categories of housing, viz.:

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1 POLICY ON HOUSING BENEFITS 1. OBJECTIVE 1.1. To adopt rationally uniform system of housing benefits to maintain balance of difference in geography, needs and cost of housing To bring rational equitability in benefits in 3 categories of housing, viz.: a. Company Owned Accommodation [COA] b. Company Leased Accommodation [CLA] c. Self-Organized (self-rented or owned) Accommodation [SOA] 1.3. To encourage need based utilization of company housing facility To provide aid in case of mobility of officers from smaller to larger locations, so as to compensate for higher cost of housing To describe eligibility, procedure and guidelines for availing housing benefits through COA, CLA or SOA for ease of understanding and implementation. 2. SCOPE 2.1. This policy is effective from 1 September, 2016 and supersedes all other prior policies and communication on this subject This policy is applicable to all officers in management cadre and on permanent rolls of Tata Power and select group companies [CGPL, MPL, IEL, TPTCL & any other company which may be incorporated in future with applicability of Tata Power HR Policies], hereafter referred as Tata Power unless context means otherwise. 3. LOCATION CLASSIFICATION For the purpose of comparison and rational parity, geographical locations, where Tata Power operates, are classified as given in table below (Table 1). This classification forms the basis to bring rational equitability in benefits across geographies, work levels and type of accommodation. Table 1: Classification of Locations/Regions for Housing Benefits Category Location(s) where Tata Power Operates A Mumbai metropolitan region including adjacent suburbs(mmr), National Capital Region (NCR) B C Bangalore, Chennai, Kolkata and other such Tier I metropolitan regions Jamshedpur, Ranchi, Bhubaneswar and other such Tier II regions Bhira, Bhivpuri, Lonavala, Khopoli, Dehrand,,Haldia, Maithon, Kalinganagar, Tiruldih, Mundra, D Dugar, Mithapur, Tubed, Mandakini, Wind Operation Sites, Bina, Nellore, and other such location categorised as non-city location by Tata Power (The above classification is based upon survey report on market rentals for housing as well as on differentiation being practiced by peer organizations In case of change in classification, the inclusion / exclusion will be notified from time to time.) Date of Issue: July 2016 P a g e 1

2 4. COMPANY OWNED ACCOMMODATION [COA] 4.1 Eligibility for COA Officers are eligible for company owned accommodation based on the nature of their job and exigencies of work, at the sole discretion of the Management, subject to availability. The house allotment rules will be formed based on availability of houses and needs of the Division. 4.2 Principles for COA a. The base rent for deduction across locations in categories A, B & C is a multiplier of base rent for location D, as follows: (i) (ii) Category A & B: 10 times the base rent for similar type of Accommodation in Category D Category C : 4 times the base rent for similar type of Accommodation in Category D (Except for Single Room Shared/Single Occupancy and 1RK at ME work level, where it is lower) b. The multiplying factor for deduction across work levels for locations in categories A, B & C are as given in Table 2: Table 2: Work Level wise Multiplying Factor for COA Deduction Work Level Formula (HRA Deduction of WL / HRA Deduction of ME Factor WL) MA 70/ MB & MC 40/ MD 25/ ME 15/ HRA Deduction for COA Officers residing in COA shall have their flexible allowance reduced to the extent shown below for respective location categories: a. Location Category A & B Table 3: HRA Deduction for COA in location category A & B (all figures are in Rs. per month) Type of House MA MB MC MD ME Single Room, Shared Occupancy NA NA NA Single Room, Single Occupancy RK NA NA BHK NA NA BHK NA BHK & above (1800sqft+) NA Date of Issue: July 2016 P a g e 2

3 b. Location Category C Table 4: HRA Deduction for COA in location category C (all figures are in Rs. per month) Type of House MA MB MC MD ME Single Room, Shared Occupancy NA NA NA Single Room, Single Occupancy RK NA NA BHK NA NA BHK NA BHK & above (1800sqft+) NA c. Location Category D 4.4 Guidelines for COA Table 5: HRA Deduction for COA in location category D (all figures are in Rs. per month) Type of House All Work levels Single Room, Shared Occupancy 250 Single Room, Single Occupancy 500 1RK 500 1BHK 500 2BHK 750 3BHK BHK & above 1250 a. Change in base rent in Category D location will be notified from time to time. The multiplication factors in location categories A, B & C will be applicable accordingly. b. HRA deduction for ME work level will be as stated in clause 4.3 [a-c] or at 15% of basic pay whichever is lower. c. All such accommodations arranged by the Employee Services & Administration (ES&A) department through special agreements from institutional bodies such as JV Partners, Govt. bodies and other Tata Group Companies shall be considered as COA. d. Accommodation allotted in Company Guest Houses on new joining / transfers etc. is excluded in this policy and will be regulated by provisions of policy on Project Related Benefits / Benefits on Transfer and policy on Transit Accommodation as applicable. e. All officers availing COA will be required to pay a nominal compensation as per their grade and corresponding amount as specified in table below [Table 6], except those allotted quarters at Hydro stations and Transmission Division at Kalyan, Ambernath and Panvel camp. Table 6: Nominal Compensation for availing COA (all figures are in Rs. per month) Grade Compensation in Rs. per month (payable by occupier of the house in COA) Grade Compensation in Rs. per month (payable by occupier of the house in COA) MA 350 MD2 225 MB1, MB2 325 ME MC1 300 ME MC2 275 ME MD1 250 ME Date of Issue: July 2016 P a g e 3

4 f. Perquisite Tax as applicable for availing COA will be deducted at source as per applicable Income Tax rules and will be borne by the concerned officer. g. Officers will be allowed to stay for 1 month in the COA post their date of retirement from the company, for which an amount equivalent to the HRA deduction (at the time of retirement) as per clause 4.3 [a-c] will be recovered from the Full & Final settlement. However, if overstay exceeds 1 month, recovery will be made as per the table below [Table 7] from the officer s full and final settlement, from the second month onwards. All applicable additional taxes will also be borne by the officer on account of deduction for overstay. All overstay requests require the prior approval from CHRO and CEO & MD. Table 7: Amount recovered for Overstay Duration of overstay post retirement Upto 1 month Amount recovered for overstay (Rs. per month) HRA deduction at the time of retirement 2 nd month 4 th month 2 X HRA deduction at the time of retirement 5 th month onwards 5X HRA deduction at the time of retirement 4.5 Procedure for COA a. ES&A department will advertise the company owned accommodations which are vacant and available for occupancy. b. Officers will forward their request for COA to ES&A department through the concerned Divisional Head at a work level not lower than MB. c. The applications will be reviewed by Corporate / Divisional ES&A teams, which will then make arrangements to provide the accommodation, subject to availability as per the officer s eligibility. d. On finalization of the accommodation for the officer, an allotment letter will be sent to the concerned officer by the ES&A department. e. Maintenance work in the allocated COA may be carried out if required and deemed necessary by the concerned authority in the ES&A department, before occupancy. f. The officer will receive possession of the house on signing an agreement on a Rs. 100/- stamp paper. g. The officer has to intimate the ES&A department regarding the proposed date of occupancy. h. On the day of occupancy, a checklist is provided to the officer who needs to complete the same and return it to the ES&A department. i. ES&A department will notify payroll regarding allocation of the COA and date of occupancy. Payroll will make the necessary deductions from the officer s monthly salary accordingly. Deduction for the first month will be on a pro-rata basis depending on the date of occupancy. j. At the time of surrendering the accommodation, the officer has to fill in another checklist and submit it to the ES&A department along with the authority letter to make the necessary deductions for utility charges from the settlement dues. k. On vacating the quarters, ES&A department will intimate Payroll regarding date of vacating the quarters. Payroll will stop the necessary deductions from the officer s monthly salary. Date of Issue: July 2016 P a g e 4

5 l. In case it is observed that there is any discrepancy in terms of damage, missing equipment in the quarters than what was provided at the time of taking possession, the necessary deductions from the officer s salary in lieu of the loss may be made, as deemed fit by ES&A s inspection team. 5. Company Leased Accommodation [CLA] 5.1 Eligibility for CLA a. The maximum rental limit per month, including value of the deposit [Rs.1000 p.m. per One Lac of deposit], for CLA shall be as per the limits stated in table below [Table 8]: Table 8: CLA Eligibility Limits (As a percentage of monthly basic salary) Work Level/ Grade Location Category A MMR NCR Location Categories B, C, D MA 125% 115% 70% MB, MC 100% 90% 40% MD 100% 90% 25% ME01 110% 100% 15% ME02 120% 110% 15% ME03, ME04 130% 120% 15% At such locations, where Tata Power has vacant quarters under COA / Housing Colonies, officers will not be eligible for CLA and/or its other related benefits, unless specifically approved as an exception by CEO & MD of Tata Power for specific reasons. b. For location categories C & D, housing colony / COA may be developed by Tata Power. Until such time, based on need, fixed limits have been decided every 2 years, based on market rates. The current terms of special approval for certain locations as applicable are shown in Annexure I. For these locations, CLA eligibility will be as per Table 8 or Annexure I (if applicable), whichever is higher HRA Deduction for CLA Officers provided with Company Leased Accommodation shall not be eligible House Rent Allowance and will have their flexible allowance reduced to the extent shown below [Table 9]. Table 9: HRA Deduction for CLA Work level % Deduction per month (as % of monthly basic salary) MA 70% MB 40% MC 40% MD 25% ME 15% Date of Issue: July 2016 P a g e 5

6 5.3 CLA Rebate To encourage, drive & reward need based utilization of the CLA facility, officers availing lease of rental value lesser than their eligibility shall be eligible for a saving in the form of a rebate. CLA Rebate would be derived as follows: CLA Rebate = 25%*[Max. CLA Eligibility (as per Table 8) Actual Utilization] OR Maximum Upto HRA Deduction as per Table 9 (Monthly Actual Utilization = Monthly Lease Rental + 1% of Total Security Deposit) Work level wise sample calculations are provided in Annexure II for reference and understanding. 5.4 Guidelines for CLA a. All CLA agreements should be registered / notarized. b. The monthly value of the deposits will be 1% of the deposit amount. (1% p.m. is derived from the prevalent applicable market interest norms of 12% p.a. This may be revised from time to time, with due notification, based on applicable market interest rates). c. In case an officer opts to stay in a CLA where the monthly rental (including monthly value of deposit amount) exceeds the rental limit, the amount in excess of the rental limit shall be deducted from the concerned officer's salary. d. As on 1 September 2016, if an officer is already staying in a CLA and if the current monthly rental is higher than his / her revised eligibility, the amount in excess of the revised CLA eligibility shall NOT be deducted from the officer till the existing lease period defined in his / her CLA agreement is completed. In case an officer wants to extend the lease of the current accommodation, a new agreement has to be prepared and registered and the revised eligibility would be applicable. e. It is mandatory to avail CLA through company appointed broker. Brokerage in such case would be borne by the company. For cities where company appointed broker is not available, officers can avail CLA through individual/self appointed broker. However, in such a case, brokerage up to a maximum of 15 days of rent shall be borne by the company. In either case, the CLA agreement would be as per the standard norms of the company. f. The electricity, water and other utility charges will be borne by the officer. Society charges (including maintenance) would be borne by the landlord / owner of the leased accommodation or by the concerned officer. Such charges shall not be borne by the company. g. Officers will be allowed to stay for 1 month in the company leased accommodation post the date of retirement from the company, for which the amount derived based on clause 5.2 will be recovered from the officer s settlement. However if overstay exceeds 1 month, the entire lease rental amount will be recovered from the concerned officer from the second month onwards. All applicable taxes will also be borne by the officer. All overstay requests require the prior approval from CHRO and CEO & MD. h. A new agreement is to be executed in case of change of residential accommodation or when the current lease period gets over. i. CLA Rebate is applicable for all new lease agreements effective on or after 01-Oct All such CLA agreements that have been entered into on or before 30-Sep-2014, and which will be renewed for the same property, would be ineligible for CLA Rebate j. For all officers availing CLA facility, CLA rebate (wherever applicable) will be calculated on the new eligibility from 1-Sep Date of Issue: July 2016 P a g e 6

7 k. Individual or group of officers, who are availing CLA accommodation under special conditions or special approvals (in exception of standard CLA provisions), will not be eligible for CLA Rebate till such time they migrate to standard CLA norms. l. Officers availing accommodation on self-lease or lease from relatives shall be required to declare the same to the ES&A dept. of the company. Maximum rental eligibility for such accommodation shall be equal to the amount of SHMA as defined in clause 6.1. Perquisite tax as applicable shall be borne by the concerned officer. 5.5 Procedure for CLA a. Officer has to raise CLA request on the 'Sangam' Portal. b. Officer should then forward their request for CLA to the ES&A department through the concerned Divisional Head at a work level not lower than MB. c. The application will be reviewed by the ES&A team who will make arrangements to provide the accommodation through company s registered / official broker. d. The lease would be in name of the company and NOT in the name of the concerned officer. e. Once the accommodation is finalized by the officer, the officer should intimate the ES&A department regarding the proposed date of occupancy. f. An allotment letter will be sent to the concerned officer by the ES&A department. g. On the day of occupancy a checklist is provided to the officer who needs to complete the same and return it to the ES&A department. h. The ES&A department will notify payroll regarding the allocation of the house and the date of occupancy as given in the lease agreement. Payroll will make the necessary deductions from the officer s monthly salary accordingly. i. At the time of surrendering the accommodation, the officer has to fill in another checklist and submit it to the ES&A department along with the authority letter to make the necessary deductions for utility charges from the settlement dues. j. On vacating the accommodation, the ES&A department will inform payroll the date of vacating the accommodation. Payroll will stop the necessary deductions from the officer s monthly salary. k. In case it is observed that there is any damage, missing equipment in the accommodation from what was provided at the time of taking possession, necessary deductions from the officer s salary in lieu of the loss may be made as deemed fit by ES&A s inspection team. 6. Self-Organized Accommodation [SOA] 6.1 Eligibility for Self House Maintenance Allowance [SHMA] All officers in location category A not availing company provided housing facilities i.e. CLA or COA (including Transit Accommodation and Guest House), and are residing in Self-Organized (self-leased / self-rented / self-owned) Accommodation (SOA) are eligible for Self House Maintenance Allowance [SHMA] as given below: SHMA = 20% * [Max. CLA Eligibility (as per Table 8) HRA Deduction (as per Table 9)] Date of Issue: July 2016 P a g e 7

8 The amount of SHMA is based on demand-supply situation of housing in a (class of) city. The amount of SHMA may be changed / withdrawn at the discretion of management. Work level wise sample calculations for SHMA are provided in Annexure III. At locations where Tata Power has vacant quarters (in respective eligible categories) in COA / Housing Colonies, officers will not be eligible for SHMA unless specifically approved as an exception by CEO & MD of Tata Power. 7. ADDITIONAL HRA All officers across the organization, in work levels MB and below will be paid Additional HRA in the salary, irrespective of the type of accommodation availed by them, as shown below [Table 10]: Table 10: Additional HRA Grade Additional HRA (Rs. per month) MB1, MB2, MC1 900 MC2, MD1 800 MD2, ME ME ME ME ROLES & RESPONSIBILITIES Roles Officers ES&A Payroll Manager Responsibilities Submit request for COA / CLA Submit checklists and authority letter (as applicable) at the time of taking possession and vacating the accommodation Arrange for COA, CLA Seek necessary undertaking and date of occupancy/ surrender from the officer Intimate payroll regarding date of occupancy/surrender Make necessary deduction from the officer s salary Make necessary payments of benefits to officers along with salary CHRO Overall process & policy ownership 9. APPLICABILITY Provisions of this policy will be applicable with effect from 01-Sept-2016 unless specified otherwise specifically in clause in the policy above. 10. EXCEPTIONS Any exception to this policy will require the approval of the CEO & Managing Director. Date of Issue: July 2016 P a g e 8

9 ANNEXURE I Location Specific CLA Eligibility (all figures are in Rs. Per month) Odisha Projects Jamshedpur Haldia Maithon (Kalinganagar) ME4 - Rs ME3 - Rs ME2 - Rs ME1 - Rs MD2 - Rs MD1 & above as per policy provisions ME1 - Rs ME2/3/4 - Rs ME2-4 - Rs.7600 to Rs ME1/MD/MC - Rs MD and above as per policy MB as per policy provision provisions ME - Rs MD - Rs MC & Above - Rs Bina Additional Housing allowance p.m ME04 - Rs ME03 - Rs ME02 - Rs ME01 - Rs MD and above as per policy provisions. Nellore Rs.8,000 is reimbursed as HRA.

10 ANNEXURE II SAMPLE CALCULATIONS for CLA Rebate for location category A - Mumbai SCENARIO 1: Utilization more than 50% Work Level MA MB/MC MD ME01 ME02 ME03, ME04 Basic 150, ,000 60,000 40,000 30,000 20,000 Eligibility 187, ,000 60,000 44,000 36,000 26,000 Rent 150,000 80,000 48,000 35,200 28,800 20,800 % Utilization 80% 80% 80% 80% 80% 80% Amount of Eligibility Un-utilized 37,500 20,000 12,000 8,800 7,200 5,200 HRA Deduction (%) 70% 40% 25% 15% 15% 15% HRA Deduction Amount 105,000 40,000 15,000 6,000 4,500 3,000 Rebate Factor 25% 25% 25% 25% 25% 25% Rebate Saving for lower utilization of CLA eligibility 9,375 5,000 3,000 2,200 1,800 1,300 SCENARIO 2: Utilization between 35% to 50% Work Level MA MB/MC MD ME01 ME02 ME03, ME04 Basic 150, ,000 60,000 40,000 30,000 20,000 Eligibility 187, ,000 60,000 44,000 36,000 26,000 Rent 75,000 40,000 24,000 17,600 14,400 10,400 % Utilization 40% 40% 40% 40% 40% 40% Amount of Eligibility Un-utilized 112,500 60,000 36,000 26,400 21,600 15,600 HRA Deduction (%) 70% 40% 25% 15% 15% 15% HRA Deduction Amount 105,000 40,000 15,000 6,000 4,500 3,000 Rebate Factor 25% 25% 25% 25% 25% 25% Rebate Saving for lower utilization of CLA eligibility 28,125 15,000 9,000 6,000 4,500 3,000 Work Level MA MB/MC MD ME01 ME02 ME03, ME04 Basic 150, ,000 60,000 40,000 30,000 20,000 Eligibility 187, ,000 60,000 44,000 36,000 26,000 Rent 37,500 20,000 12,000 8,800 7,200 5,200 % Utilization 20% 20% 20% 20% 20% 20% Amount of Eligibility Un-utilized 150,000 80,000 48,000 35,200 28,800 20,800 HRA Deduction (%) 70% 40% 25% 15% 15% 15% HRA Deduction Amount 105,000 40,000 15,000 6,000 4,500 3,000 Rebate Factor 25% 25% 25% 25% 25% 25% Rebate Saving for lower utilization of CLA eligibility SCENARIO 3: Utilization less than 35% 37,500 20,000 12,000 6,000 4,500 3,000

11 ANNEXURE III SHMA Incentive Sample Calculations for location category A (Mumbai) (all figures are in Rs. per month) Work Level Basic Salary Max. CLA Eligibility HRA Deduction % SHMA Multiplier SHMA MA % 20% MB/MC % 20% MD % 20% 9000 ME % 20% 7600 ME % 20% 6300 ME03, ME % 20% 4600 SHMA Incentive Sample Calculations for location category A (Delhi) (all figures are in Rs. per month) Work Level Basic Salary Max. CLA Eligibility HRA Deduction % SHMA Multiplier SHMA MA % 20% MB/MC % 20% MD % 20% 7800 ME % 20% 6800 ME % 20% 5700 ME03, ME % 20% 4200