Dearness Allowance, abbreviated DA, is the inflation-linked component of a Central Government employee’s salary. It is paid as a percentage of basic pay, revised twice a year, and exists to protect the real purchasing power of salaries against rising prices. As of 1 January 2026, DA stands at 60% of basic pay, raised from 58% by Office Memorandum No.1/4(i)/2025-E.II(B) issued by the Department of Expenditure on 22 April 2026.
Quick reference
| Item | Value |
|---|---|
| Current rate | 60% of basic pay |
| Effective from | 1 January 2026 |
| Notification OM | No.1/4(i)/2025-E.II(B), dated 22 April 2026 |
| Frequency of revision | Twice a year (1 January and 1 July) |
| Calculation basis | AICPI-IW (Base 2001=100), 12-month average |
| Beneficiaries | 50.46 lakh employees + 68.27 lakh pensioners |
| Arrears for Jan–Mar 2026 | Payable with April 2026 salary |
How DA is calculated
The DA percentage is derived from a published formula linked to the All-India Consumer Price Index for Industrial Workers (AICPI-IW). The Labour Bureau, Shimla, publishes monthly AICPI-IW figures. The 7th CPC formula in current use is:
DA % = [(12-month average of AICPI-IW with Base 2001=100 − 115.76) / 115.76] × 100
where 115.76 is the AICPI-IW level on 1 January 2016 (the date the 7th CPC pay structure took effect), used as the baseline. The 12-month average is rolled forward each cycle. The result is rounded to the nearest whole percent.
Worked example for 1 January 2026 cycle
- 12-month AICPI-IW average for January–December 2025: 145.54 (approximate, as published by Labour Bureau).
- Numerator: 145.54 − 115.76 = 29.78.
- Ratio: 29.78 / 115.76 = 0.2572.
- DA percentage: 0.2572 × 100 = 25.72% above the 7th CPC base.
- This translates to a total DA of approximately 60.33% (the 7th CPC base also includes prior accrued DA), rounded to 60%.
The arithmetic is mechanical. The Cabinet does not negotiate the figure; it formalises what the formula produces. The only discretion lies in timing of the formal notification.
How DA appears on your salary slip
DA is shown as a separate line item on every Central Government salary slip. It is computed each month as basic pay × DA percentage, rounded as per FR rules (50 paise and above rounds up; below 50 paise is ignored).
Worked example, Level 4
- Basic pay (Level 4 entry): Rs. 25,500
- DA at 60%: 25,500 × 0.60 = Rs. 15,300
- DA at previous 58%: 25,500 × 0.58 = Rs. 14,790
- Monthly increase from January 2026: Rs. 510
- Three-month arrears (Jan–Mar 2026): Rs. 1,530, paid with April 2026 salary
Worked example, Level 10
- Basic pay (Level 10 entry): Rs. 56,100
- DA at 60%: Rs. 33,660
- DA at previous 58%: Rs. 32,538
- Monthly increase: Rs. 1,122
- Three-month arrears: Rs. 3,366
Why DA matters beyond the monthly amount
DA is not just a line item on the salary slip. It feeds into several downstream calculations:
- HRA slab triggers. Under the 7th CPC, HRA was originally 24%/16%/8% for X/Y/Z cities. When DA crossed 25%, HRA was raised to 27%/18%/9%. When DA crosses 50%, HRA rises again to 30%/20%/10%. With DA now at 60%, the higher slab is in force.
- Pension and family pension. Both are revised with each DA cycle in the form of Dearness Relief, paid at the same percentage to pensioners and family pensioners.
- Leave encashment at retirement. Computed on basic + DA at retirement; a higher DA at retirement directly raises the encashment amount.
- NPS contribution. Employee contributes 10% and Government 14% on basic + DA. A higher DA increases monthly contribution and the accumulated corpus.
- Gratuity, transport allowance reckoning, and certain advances. Several use basic + DA as the reckoning base.
What happens to DA when the 8th CPC takes effect
Pay Commission convention is that on the day a new pay structure takes effect, the existing DA is merged into the new basic pay, and DA resets to 0%. From that point, the AICPI-IW counter starts again from the new base. The exact mathematics of merger (whether all 60% goes into basic, or a portion remains as a residual allowance) is decided by the Commission and the Cabinet. For now, with the 8th CPC report due around mid-2027, DA continues to accrue on the 7th CPC base. The next revision is expected on 1 July 2026.
Projected July 2026 DA
Based on AICPI-IW data for February 2026 (148.6) and March 2026 (148.5), the 12-month average is trending toward 148–149, which would push DA to approximately 62–63% with effect from 1 July 2026. This is a projection from published AICPI-IW data, not an announced rate. The formal Cabinet decision and OM are usually issued in September or October each cycle.
DA for pensioners (Dearness Relief)
Pensioners and family pensioners receive Dearness Relief (DR) at the same percentage as DA for serving employees. DR is computed on the basic pension (or family pension), not on basic pay. Each DA notification by the Department of Expenditure is followed within days by a corresponding DR notification by the Department of Pension and Pensioners’ Welfare. The current DR is 60% with effect from 1 January 2026.
DA in different pay commissions: historical rates
| Effective from | DA rate | Notes |
|---|---|---|
| 1 Jan 2016 | 0% | 7th CPC takes effect; DA reset |
| 1 Jul 2016 | 2% | First post-7CPC revision |
| 1 Jan 2017 | 4% | |
| 1 Jul 2017 | 5% | |
| 1 Jan 2018 | 7% | |
| 1 Jul 2018 | 9% | |
| 1 Jan 2019 | 12% | |
| 1 Jul 2019 | 17% | HRA upgraded as DA crossed 25% |
| 2020 (COVID freeze) | 17% | Three revisions cumulated, paid as arrears in 2021 |
| 1 Jul 2021 | 28% | Cumulative restoration |
| 1 Jan 2022 | 34% | |
| 1 Jul 2022 | 38% | |
| 1 Jan 2023 | 42% | |
| 1 Jul 2023 | 46% | |
| 1 Jan 2024 | 50% | HRA upgraded again as DA hit 50% |
| 1 Jul 2024 | 53% | |
| 1 Jan 2025 | 55% | |
| 1 Jul 2025 | 58% | |
| 1 Jan 2026 | 60% | Latest, OM dated 22 April 2026 |
Frequently asked questions
When does the next DA revision happen?
1 July 2026 is the next due date. The formal OM is usually issued in September or October, with arrears for July, August, and September paid alongside the October salary.
Is DA taxable?
Yes. DA is fully taxable as part of salary income. There is no exemption under section 10 for DA on Central Government salary.
Does DA affect HRA, TA, and other allowances?
HRA: yes — slab upgrades trigger when DA crosses 25% and 50% thresholds. Transport Allowance: a portion is reckoned on DA. CEA (Children’s Education Allowance) and others: no direct linkage.
Why was the OM dated 22 April 2026 when the rate is effective from 1 January 2026?
This is the standard pattern. The Cabinet approves the rate around the second or third month of the cycle (April for the January cycle). The notification is then drafted and issued. Arrears for the intervening months are paid in lump sum with the April salary.
Sources
- Department of Expenditure OM No.1/4(i)/2025-E.II(B), dated 22 April 2026.
- 7th CPC Report, Chapter 8 (Allowances), https://doe.gov.in.
- Labour Bureau, Shimla — monthly AICPI-IW press releases (https://labourbureau.gov.in).
- Department of Pension and Pensioners’ Welfare — corresponding DR notifications.
- Cabinet Committee on Economic Affairs press note, 18 April 2026.