Big good news is coming for about 1 crore employees and pensioners of the central government. They are waiting for the last salary hike under the 7th Pay Commission. The government is expected to announce the increase in Dearness Allowance (DA) and Dearness Relief (DR) for July 2025 soon. This hike will be effective from July, but the money usually comes into bank accounts by October. This time it will come just before the festive season.

This upcoming hike will be the last one under the 7th Pay Commission. The 7th Pay Commission started in January 2016 and will end in December 2025. It covers about 33 lakh employees and 66 lakh pensioners. Earlier, the government had increased DA by 2% in March this year. From January 2025, DA increased from 53% to 55% of the basic salary. The aim of this hike is to reduce the effect of inflation. DA is an important part of a government employee’s salary.

All eyes are now on the 8th Pay Commission, which will start in January 2026. When a new pay commission is implemented, the DA is reset to zero because the indexation basis changes. For example, before the 7th Pay Commission in 2016, DA had reached 125% of the basic pay.

Experts say that if DA rises to 60% before the end of the 7th Pay Commission, salaries may increase by about 14% under the new structure. But this will be the slowest salary growth compared to the last four pay commissions.

What can employees expect?

This increase is calculated using the Consumer Price Index for Industrial Workers (CPI-IW). CPI-IW tracks monthly retail price changes in a fixed basket of goods and services.

The formula used under the 7th Pay Commission is:

DA (%) = [{12-month average of AICPI-IW (Base 2001) – 261.42} ÷ 261.42] x 100

In March this year, the government increased the DA by 2%, which took it to 55%. This hike is effective from January 2025. The government does this to reduce the effect of inflation on employees. DA is a very important part of the salary for government employees.

The main aim of DA and DR is to reduce the impact of rising prices. As the cost of goods and services keeps going up, this increase helps employees and pensioners maintain their income in real terms.

The payment for this increase is usually credited to the bank accounts by October. This is the time when the festive season begins, so the extra money will help employees and pensioners manage their expenses and celebrate the festivals better.

Eye on the 8th Pay Commission

Now everyone is looking towards the 8th Pay Commission. It is expected to start from January 2026, but the government has not made any announcement yet. No members have been appointed so far. Experts believe that there could be a delay of 1.5 to 2 years in its implementation. If this happens, employees may get arrears for the delayed period.