Dearness Allowance (DA) Calculations: Every pay commission revises the basic salary of a government employee.

However, after that, there is no revision in the salary till the next pay commission is implemented.

But still, the salary of a government employee rises because of periodic increase in dearness allowance (DA).

It is an important part of an employee’s salary as it helps their pay to adjust to the rising inflation.

Since inflation is a constant factor in an economy, the government revises the DA rate twice a year.

But how does DA impact the salary of an employee?

How does salary change when Centre increases DA, and what can be the expected rise in the salary of central government employees if the government increases DA from its current rate of 53 per cent to 55 per cent. 

How DA is calculated 

DA is calculated on the basis of All India Consumer Price Index (Industrial Workers).

Its reading changes with time, so do the DA rates.

The Labour Bureau of the Ministry of Finance issues AICPA (IW) data every month.

However, the Cabinet announces a DA hike twice a year. 

What was last DA hike?

The DA was last increased in July 2024, when it rose from 50 per cent to 53 per cent.

When a pay commission is formed, the DA starts from 0.

The reading keeps increasing with time.

At the end of a pay commission, DA is merged with the basic salary of an employee.

In the fresh pay commission, it again starts from 0. 

Can Centre hike DA soon?

The first-half DA announcement of the year 2025 is yet to take place.

The AICPA (IW) December reading will be taken into account to declare the new DA.

Employees will get arrears from January. The DA hike can be 2 per cent-3 per cent.

How DA impacts salary of employee

DA is a percentage of an employee’s salary.

If their basic pay is Rs 50,000 and the current DA rate is 53 per cent, they may get Rs 76,500 total pay (excluding other allowances such as HRA, TA).

But if there is a 2 per cent rise in the DA rate, the revised salary will be Rs 77,500..

Revised salary for Rs 40,000 basic pay if DA increases by 2%

Current salary (at 53% DA)- Rs 61,200

Estimated revised salary (at 55% DA)- Rs 62,000

Revised salary for Rs 55,000 basic pay if DA increases by 2%

Current salary (at 53% DA)- Rs 84,150

Estimated revised salary (at 55% DA)- Rs 85,250

Revised salary for Rs 60,000 basic pay if DA increases by 2%

Current salary (at 53% DA)- Rs 91,800

Estimated revised salary (at 55% DA)- Rs 93,300 

Revised salary for Rs 70,000 basic pay if DA increases by 2%

Current salary (at 53% DA)- Rs 1,07,100

Estimated revised salary (at 55% DA)- Rs 1,08,500