The Central Government changes the Dearness Allowance (DA) and Dearness Relief (DR) rates for central employees and pensioners two times every year – in January and July. These changes are based on the All India Consumer Price Index (AICPI) data. The Ministry of Labour gives this data from January to June and July to December.

In January 2025, the DA for employees and pensioners under the 7th Pay Commission increased by 2%. This was announced in March 2025. After this, the DA went up from 53% to 55%. Now in July 2025, the DA is going to change again. This will be based on the AICPI data from January to June. The new DA is likely to be announced after Rakshabandhan.

DA May Increase by 3% or 4% from July 2025

According to the AICPI-IW data so far, the index was 143.2 in January 2025, 142.8 in February, 143.0 in March, 143.5 in April, and 144.0 in May — showing a rise of 0.5 points. Based on this, the DA score has reached 57.85%, which suggests a 3% hike.

The final data for June 2025 is yet to come and will be released around 30–31 July. If the index increases by another 0.5 points, the DA may rise by 4%. Otherwise, a 3% hike is almost certain. This will take the DA from 55% to either 58% or 59%.

The official announcement is expected around Diwali (October–November), once the full data from January to June is available.

When Will the DA Be Announced and How Is It Calculated?

After the data is released, the Labour Bureau will prepare a report and send it to the Ministry of Finance. The proposal will then go to the Cabinet for approval. Once approved, the Finance Ministry will issue the official orders. The new DA rates will be effective from July 2025. In that case, employees and pensioners may also receive arrears for July, August, and September.

The DA for central government employees and pensioners is calculated using this formula:

DA (%) = [(12-month average of AICPI-IW – 261.42) / 261.42] × 100

For example, if the 12-month average of AICPI-IW is 392.83, the DA will be:

(392.83 – 261.42) / 261.42 × 100 = 50.28%

So, the DA can be increased up to 50%, rounding off the decimal.