Dearness Allowance Hiked to 63%: What It Means for Your Pay
The Cabinet approved a 3% Dearness Allowance hike for central government staff and pensioners just before Diwali. Here is what changed and who gains.
On 28 October 2026, the Union Cabinet approved a 3 percentage point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the rate from 60% to 63% of basic pay or pension. The decision was announced days ahead of Diwali and takes effect retrospectively from 1 July 2026.
The change affects about 48.54 lakh central government employees and 68.71 lakh pensioners, and is expected to cost the exchequer roughly ₹10,016 crore a year, according to the government's own announcement.
What DA and DR actually are
Dearness Allowance is a part of a government employee's salary meant to offset the rising cost of living. Dearness Relief is the equivalent top-up paid to pensioners. Both are calculated as a percentage of basic pay (or basic pension) and are revised twice a year, usually in January and July, based on retail inflation trends among industrial workers.
The 7th Central Pay Commission's accepted formula is used to work out each revision, so the exact figure is not a political decision taken in isolation; it follows from inflation data collected over the preceding months.
- The DA rate was 60% before this revision.
- It now stands at 63%, a rise of 3 percentage points.
- The new rate applies from 1 July 2026, so employees and pensioners are due arrears for the months between July and the month their revised pay is processed.
Who benefits and by how much
The actual rupee amount depends on an employee's basic pay, since DA is a percentage of that figure, not a flat sum. A higher basic pay means a higher DA amount for the same percentage increase.
- Central government employees across all pay levels get the 3-point rise on their basic pay.
- Pensioners get the matching 3-point rise in Dearness Relief on their basic pension.
- Because the hike is retrospective to 1 July 2026, eligible employees and pensioners will also receive arrears, the difference between the old and new rate, backdated to July.
What most people miss
- DA hikes are routine, not a one-off reward. This is the second revision in 2026; the rate rose from 58% to 60% in January before this latest move to 63%.
- The percentage increase looks the same for everyone, but the actual money gained is different for each employee because it depends on individual basic pay.
- Transport Allowance, which is also partly linked to DA, typically rises alongside it, so some employees may see a small additional change beyond DA itself.
- Arrears take time to appear. A revision effective from July does not always show up in the very next payslip; employees should check their own department's payroll notice rather than assume a date.
