Big relief news is about to come for more than 1.2 crore central employees and pensioners across the country. Under the Seventh Pay Commission, Dearness Allowance (DA) and Dearness Relief (DR) for pensioners are likely to increase once again. According to reports, the government may announce an increase in DA just before Diwali, i.e., in the first week of October. This decision will directly increase the salary and pension of employees and pensioners.
Bumper gift before Diwali
It is expected that the dearness allowance of central employees will increase from 55 percent to 58 percent. This increase will come into effect from July 1, 2025, which means that employees will also get three months’ arrears. These arrears are expected to be received with the salary of October. This step is being taken at a time when employees are waiting for the formation of the Eighth Pay Commission, which will come into effect on December 31, 2025.
How is DA calculated
Dearness Allowance is calculated based on the Consumer Price Index (CPI-IW). This index is determined based on the average of the last 12 months. The average of CPI-IW from July 2024 to June 2025 was 143.6, which brings the rate of dearness allowance to 58 percent. This simply means that the dearness allowance of central employees will increase by three percent for the period July-December 2025.
How much will the salary and pension increase
The increase in dearness allowance will bring more money directly into the pockets of employees and pensioners. Let us understand with an example:
If the basic salary of an employee is ₹ 50,000, then at the old rate of 55%, he used to get ₹ 27,500 DA. Now with the new rate of 58%, it will increase to ₹ 29,000, which will give an additional benefit of ₹ 1,500 every month.
Similarly, the DR of a pensioner with a basic pension of ₹30,000 will increase from 55% to 58%, increasing their monthly pension by ₹900.
This hike shows that employees will get an additional benefit of ₹1,500 every month, and pensioners will get ₹900.
Is this the last hike under the Seventh Pay Commission
This hike is also special because it will be the last DA hike under the Seventh Pay Commission. The term of the Seventh Pay Commission ends on 31 December 2025. The government has already announced the Eighth Pay Commission in January 2025, but its members and terms of reference (ToR) have not been finalized yet. In such a situation, this hike will give a big financial relief to the employees before the new commission comes.