DA HIKE UPDATE: Central government employees may see another hike in their Dearness Allowance (DA) in the new year. From January 2027, the DA could increase from the current 63% to 67%—a rise of 4 percentage points on the employees’ basic pay. Meanwhile, the Union Cabinet approved a 3% hike in the Dearness Allowance (DA) for central government employees on October 28. Effective from July 1, 2026, the DA has increased from 60% to 63% of the basic pay.
This “Diwali gift” is based on the formula recommended by the 7th Central Pay Commission. The calculation is applied only to the basic pay, not the total salary. The formula for calculating DA is DA Amount = Basic Pay × DA Rate ÷ 100.
How much will the salary increase?
Under this formula, for central government employees at Level 1 with a basic salary of ₹18,000, the DA will increase by ₹540 per month. Previously, at a rate of 60%, they received ₹10,800 per month; at the new rate of 63%, they will now receive ₹11,340 per month. For employees at Level 5, with a basic salary of ₹29,200, the DA will increase by ₹876. At the previous rate of 60%, their DA was ₹17,520, which will now rise to ₹18,396 at the 63% rate. The arrears up to October will amount to ₹3,504.
Gifts from State Governments
Following the announcement of the DA hike for central government employees, the state governments of Tamil Nadu, Rajasthan, Chhattisgarh, and Madhya Pradesh also increased the DA for their respective employees and pensioners by the end of October.
How much has each state increased the DA? Rajasthan and Tamil Nadu have announced a 3% increase in Dearness Allowance (DA). This hike will be effective from July 1, 2026, and employees will also receive arrears for the preceding months.
Chhattisgarh has announced a 2% increase in DA, raising the state’s DA from 58% to 60%. These new rates will come into effect in Chhattisgarh from November 1, 2026.
Madhya Pradesh has announced a 2% increase in DA for its employees, raising the DA from 58% to 60%. Employees will begin receiving the increased 60% DA starting with their November 2026 salary.
Formula for calculating DA:
DA = [{(Average AICPI-IW for the last 12 months × 2.88) – 261.41} ÷ 261.41] × 100
– Step 1: 152 × 2.88 = 437.76
– Step 2: 437.76 – 261.41 = 176.35
– Step 3: 176.35 ÷ 261.41 = 0.674607
– Step 4: 0.674607 × 100 = 67.46%
Thus, based on this formula, the DA rate comes to approximately 67.46%.