The Union government announced a 3 percentage-point increase in dearness allowance on Wednesday, taking the rate to 63% from July 1, 2026. This hike will benefit 48.54 lakh central government employees and 68.71 lakh pensioners. The move helps many families manage rising costs as the government adjusts payments for inflation.
The Union government has announced a 3 percentage-point increase in dearness allowance for employees and dearness relief for pensioners, taking the rate from 60% to 63% of basic pay and pension. The hike, announced by the Union Cabinet on Wednesday, will be effective retrospectively from July 1, 2026.
The decision is expected to benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners. The revised allowance will provide additional financial support to beneficiaries as the government adjusts payments to account for inflation.
How Much Will Salaries Increase?
The increase in DA will depend on an employee's basic salary. For central government employees with a basic pay of Rs 18,000, corresponding to Level 1 under the pay matrix, the 3 percentage-point hike translates into an additional Rs 540 per month.
Employees drawing a basic salary of Rs 50,000 will receive an additional Rs 1,500 per month. Since the revised rate is effective from July 1, eligible employees and pensioners may also receive arrears for the applicable period, subject to the government's payment arrangements.
DA Hike Trend Since July 2023
A letter from an employee union recently highlighted the steady rise in DA over the past few years. According to the letter, the rate stood at 46% in July 2023 before increasing to 50% in January 2024 and 53% in July 2024, reported NDTV.
The allowance subsequently rose to 55% in January 2025, 58% in July 2025 and 60% in January 2026. This represented a cumulative increase of 14 percentage points between July 2023 and January 2026. The latest revision takes the rate to 63%.
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How Is Dearness Allowance Calculated?
Dearness allowance is revised twice a year, usually in January and July, to help government employees cope with inflation. The calculation is linked to the Consumer Price Index for Industrial Workers, published monthly by the Labour Bureau under the Ministry of Labour and Employment.
The Seventh Pay Commission framework remains in force. For the July 2026 revision, the calculation uses the average All-India Consumer Price Index for Industrial Workers over the preceding 12 months, from July 2025 to June 2026.
The applicable formula is:
DA (%) = [(12-month average AICPI-IW × 2.88) − 261.33] / 261.33 × 100
The latest increase continues the government's periodic adjustment of DA and DR to help central government employees and pensioners manage changes in the cost of living.