DA hike: How much monthly increase in salary does each employee level get from 2% jump in dearness allowance?

The Ministry of Finance on 22 April announced revision of rates of Dearness Allowance (DA) for central government employees, effective from 1 January 2026. It added that the President has sanctioned the proposal dated 6 October 2025.

In an office memorandum from the Department of Expenditure, the ministry noted that DA payable to central government employees shall be increased from 58% to 60% of Basic Pay, with effect from 1 January 2026.

The increase also applies to civilian employees paid from the Defence Services estimates and the expenditure will be chargeable to the relevant head of the Defence Services Estimates. It added that separate orders will be issued by the Ministry of Defence and Ministry of Railways will also be issued for armed forces personnel and railway employees, respectively.

How much is salary increase for each employee level?

What is Dearness Allowance?

Dearness Allowance (DA) is a percentage of employees' basic salary designed to help mitigate the effects of inflation on their living expenses. This allowance is typically revised every six months to reflect fluctuations in the cost-of-living index.

Determined by the All-India Consumer Price Index (AICPI), which monitors retail price fluctuations, DA and dearness relief for employees and pensioners is updated twice annually. The announcements are generally in early March and October for hikes effective in January and July.

What has changed: Basic pay, how will DA be calculated?

According to the announcement, DA will continue to be a distinct element of remuneration and will not be treated as pay within the ambit of its fundamental rules. Further, payment on account of DA involving fractions of 50 paise and above may be rounded off to the next higher rupee and the fractions of less than 50 paise may be ignored.

As per the ministry, the term ‘Basic Pay’ in the revised pay structure means the pay drawn in the prescribed Level in the Pay Matrix as per 7th central pay commission (CPC) recommendations accepted by the Government. Basic pay does not include any other type of pay such as special pay, etc., it added.

Who will benefit from DA hike?

An increase in DA results in higher take-home pay for government employees, offering some relief as inflation continues to affect households.

As many as 50 lakh central government employees, including defence personnel, and around 65 lakh retired central government pensioners, including defence retirees will benefit from the DA hike.

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