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DA/DR Hike: 1 Crore Indians Get More Pay
18 Jul
Summary
- Nearly one crore central government employees and pensioners to benefit.
- Dearness Allowance aims to offset rising living costs.
- DA is subject to income tax for salaried employees.
Approximately one crore central government employees and pensioners are poised to receive an increase in their Dearness Allowance (DA) and Dearness Relief (DR). This includes about 50 lakh current employees and nearly 65 lakh retirees.
The DA serves as a crucial component of basic salaries, acting as a buffer against inflation and helping government personnel and pensioners cope with the rising cost of living.
Updated twice annually based on the All-India Consumer Price Index, new DA rates were last announced in April, increasing the component from 58% to 60% of the basic salary, effective from January 1, 2026.
This allowance is calculated using a formula prescribed by the 7th Pay Commission and is part of an employee's cost-to-company (CTC). Fractions of 50 paise or more in payments are rounded up to the next higher rupee, while smaller fractions are disregarded.
For salaried individuals, the DA is fully subject to income tax, and its component must be declared separately in Income Tax Returns. The prospect of an 8th Pay Commission recommendation is anticipated around February or April 2027.
