DA Hike May Be Affected in the New Year…Employees should be alert

DA Hike 2026: Central government employees and pensioners might have to accept a modest salary hike in the upcoming year. The revisions for the Dearness Allowance (DA) and Dearness Relief (DR), set to take effect in January 2026, are anticipated to rise by only 2 percent this year. If this occurs, the dearness allowance for central government employees will increase from 58% to 60%, marking the smallest rise in seven years.

It’s important to note that the dearness allowance is determined based on the Consumer Price Index for Industrial Workers (AICPI-IW). The index has been steadily climbing from July 2025 to October 2025, reflecting increasing inflation. Nevertheless, the growth is not so swift that the allowance should hit 61%.

The term will conclude on December 31. This will mark the first revision outside the 10-year cycle of the 7th Pay Commission. The 7th Pay Commission’s tenure wraps up on December 31, 2025, while the 8th Pay Commission has just commenced its work. Its Terms of Reference (ToR) do not explicitly state the implementation date.

The Commission has a period of 18 months to present its report, and it typically takes 1–2 years post-report for the new pay structure to be put into effect. This implies that employees might start enjoying the benefits of the 8th Pay Commission by late 2027 or early 2028.

Central employees are feeling anxious. The primary worry among employees is whether the new pay structure will be enacted from January 2026, as the government has not provided a definitive answer on this matter in Parliament. Consequently, it seems almost certain that the dearness allowance will remain under the current structure for the next few years, until the 8th Pay Commission is fully operational. This slight increase in allowance is also crucial because once the 8th Pay Commission is implemented, the DA at that time will be added to the basic pay, resetting the DA to zero. This indicates that the four allowance revisions from January 2026 to July 2027 will directly influence your basic salary in the new pay structure.