The Government has approved the revision of Dearness Allowance (DA) latest for the central government employees and pensioners who are under the 7th Pay Commission. The Cabinet sanctioned an increase of 3% DA/DR (Dearness Relief) additional instalment with effect from 1st July 2025 which has raised the rate from 55% to 58% of basic pay/pension. The 2% increase that had been allowed earlier was already in place from 1st January 2025 changing the rate from 53% to 55%. This latest increase is likely to be the last one under the 7th CPC since the tenure of that Pay Commission is over on 31 December 2025.
What Is The Process Of DA Calculation & The Reason For The Hike?
The computation of DA depends on the Consumer Price Index for Industrial Workers (CPI-IW) for the country as a whole. According to the 7th CPC prescription:
DA (%) = [(CPI-IW average × 2.88) – 261.42] ÷ 261.42 × 100 The CPI-IW average measure for the period July 2024to June 2025 is 143.6 which gives a DA of close to 58%. The justification: inflation has reduced real incomes and therefore the hikes are intended to provide some comfort before the festive season starts.
What Are The Impacts On Basic Salary And Pensions?
An increment in DA from 55% to 58% signifies an explicit rise in future salaries for workers and a corresponding increase in monthly pensioners. To illustrate:
- At 58% DA the minimum basic pay of ₹18,000 comes to ₹28,440 (+ ~₹540 over 55% rate scenario)
- For pensioners with a basic pension of ₹9,000 at 58% DR the total will be about ₹14,220. All allowances that are related to the basic pay (like HRA, TA etc.) will also increase by the same percentage, thus raising the overall income.
What Employees & Pensioners Must Acknowledge
- The allowance for the DA hike is going to be for the period starting from 1 July 2025, and the arrears will most likely be paid in the subsequent months.
- This hike is anticipated to be the last one under the 7th Pay Commission; further modifications regarding the basic pay and DA structure might be brought in by the 8th Pay Commission which will be set up soon.
- To some extent, the 3% increase gives support, but the majority of people consider the real-term profits to be small in the light of inflation; hence, the next Pay Commission’s major restructuring will be very important for long-term gain.
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