The classification of Indian cities by the Government of India led to the demarcation of cities in different Tier groups. The classification was introduced to help in allocation of House Rent Allowance (HRA) to public servants employed across different cities in India.

In this system, cities are classified on the basis of their population. The categories are known as Tier-I, Tier-II and Tier-III.

HRA is also used to provide income tax exemptions.