What dearness allowance is
Dearness allowance protects central and state government employees and pensioners (as dearness relief) against inflation. Basic pay stays fixed on the pay matrix, so DA is the part that rises with prices. It is revised twice a year, effective 1 January and 1 July, based on the All India Consumer Price Index for Industrial Workers (AICPI-IW).
DA % = (12-month average AICPI-IW (2001 = 100) − 261.42) ÷ 261.42 × 100
The Labour Bureau now publishes the index on a 2016 base, and the figure is converted to the 2001 base with a linking factor of 2.88 for the formula above.
DA rate history under the 7th CPC
| Effective from | DA rate |
|---|---|
| 1 July 2026 | Expected around 63% (not yet announced) |
| 1 January 2026 | 60% |
| 1 July 2025 | 58% |
| 1 January 2025 | 55% |
| 1 July 2024 | 53% |
| 1 January 2024 | 50% |
Example at 60% DA
| Basic pay | DA at 60% | Basic + DA |
|---|---|---|
| ₹18,000 | ₹10,800 | ₹28,800 |
| ₹25,500 | ₹15,300 | ₹40,800 |
| ₹35,400 | ₹21,240 | ₹56,640 |
| ₹44,900 | ₹26,940 | ₹71,840 |
| ₹56,100 | ₹33,660 | ₹89,760 |
A 2-point DA hike adds 2% of basic every month. On ₹44,900 basic, the rise from 58% to 60% is worth ₹898 a month. Use the arrears calculator for the lump sum owed when a hike is paid late.
DA in private-sector pay
The AICPI-linked DA is a government pay component. Some private employers use an allowance with the same name, but it does not follow the government formula. Under the Labour Codes, DA counts as part of 'wages', so it is included when PF and gratuity are calculated.
Frequently asked questions
What is the current DA rate?
60% of basic pay for central government employees, effective 1 January 2026.
When is the next DA hike?
The next revision is due from 1 July 2026. It is usually announced a few months later, with arrears for the intervening months.
Is DA taxable?
Yes. DA is fully taxable as part of salary under both tax regimes.
Will DA become zero under the 8th Pay Commission?
Yes. When new pay scales are implemented, accumulated DA is merged into basic pay and DA restarts from zero.