Big news has come for central government employees and pensioners. According to information released on August 18, the Union Cabinet has approved a 2 percent increase in Dearness Allowance (DA). Following this decision, the DA of central government employees will increase from 58 percent to 60 percent. Approximately 5 million central government employees and over 6.5 million pensioners are expected to benefit from this increase. The DA increase will increase employees' monthly salaries, while pensioners will also benefit from the increased pension.

How much increase in basic salary?

For example, if a central government employee's basic salary is ₹36,500, their dearness allowance at 60% would be ₹21,900. However, the actual salary depends not only on DA but also on HRA, TA, and other allowances and deductions.

Will they get arrears also?

If this DA hike is effective from January 1, 2026, central employees and pensioners may receive their arrears from January 1. This means that they will likely receive the arrears for previous months along with the implementation of the increased DA rate.

Meanwhile, there are reports
that discussions are underway regarding an increase in the House Rent Allowance (HRA) for central government employees. This increase could further increase employees' total monthly income.

Why is dearness allowance increased?
As inflation rises, so do the prices of essential commodities, impacting the purchasing power of employees' income. Keeping this in mind, the government revises dearness allowance (DA) twice a year. These DA changes are based on CPI-IW data, or the Consumer Price Index for Industrial Workers. Meanwhile, the Eighth Pay Commission is expected to bring significant changes to employees' pay structures. Consequently, an increase in DA could provide additional financial relief to central government employees.

PC: Upstox