The recent move by the government has instilled confidence in the central government employees and pensioners as the Dearness Allowance (DA) rate has been upped from 55 % to 58 % of basic salary/pension with effect from 1st July 2025. The 3 % hike is a typical one in the process of bi-annual DA revision that is under the 7th Pay Commission and is aimed at combating the inflation that has been on the rise. With the announcement came the expectation of backpayments for the quarters covering the period from the date of effect.
Why Arrears Are an Issue
The pandemic saw the DA of a large number of central government employees and pensioners being frozen from January 2020 to June 2021. This resulted in the formation of a pile-up of DA hikes that were unpaid and were always referred to as “frozen arrears”. The employees and pensioners have still kept their hopes alive that the settlement of the bankrupts will come through someday. Although the latest hike is for the post-July 2025 period, the frozen period remains the bone of contention. The unions claim that postponing of the settlement of arrears not only affects the earning but also the purchasing power of the affected people.
How Much Will You Get?
For a government employee with a basic salary of ₹ 18,000, the 3 % rise means a monthly gain of ₹ 540 (₹ 18,000 × 3 %). Hence, the three-month arrears amount is approximately ₹ 1,620. The pensioners who have a basic pension of ₹ 9,000 would be receiving almost ₹ 270 per month as their gain which can be quantified as ₹ 810 for the quarter. Even though these amounts may look small when viewed separately, they are actually huge for many of the recipients as they will be able to manage their living costs through these amounts.
What’s Next & Who’s Affected?
The timelines for payment of the arrears still need to be clarified. Since the date of effect is 1 July 2025, the first pay or pension slip after the official announcement should show the new DA rate along with the arrears. It is advisable that the employees and pensioners keep a check on the revised rate as well as the quarterly arrears being credited. In addition to this, the current increase given to the employees will just be for the post-July period; however, the period of Jan-2020 to Jun-2021 which also has the cry of freeze may lead to negotiations with the labor unions that will be carrying on.
Employees & Pensioners: Key Takeaways
- Check your payslip or pension statement for the 58% DA rate and arrear credited.
- Admit that the increase is valid only from 1st July 2025, while the previous frozen periods might call for separate action.
- Be aware that arrears are considered as income in the year they are paid and thus, tax implications should be factored in.
- Keep yourself informed with the official circulars as the date of execution and particulars (like parts of arrears or full credit) may differ from one department to another.
Also Read: New Gratuity Rules 2025: Bigger Benefits And Higher Limits For Government Employees