New Delhi: The Union Cabinet on Wednesday approved a 3 per cent hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners.
This will benefit over 1.16 crore people ahead of the festive season. The increase will be effective from July 1, 2026, PTI reported.
In April, the Cabinet has approved a 2 per cent hike, which took the DA and DR rate to 60% of basic pay and pension, respectively.
To help employees and pensioners cope with inflation the government revises DA and DR twice a year, in January and July. The latest announcement pertains to the July 2026 DA revision for central government employees.
DA is a cost-of-living adjustment paid to government employees as a percentage of basic pay. DR is the corresponding benefit for pensioners. Both are intended to offset the impact of rising prices.
The announcement came on Wednesday after several expected announcements in October. With a 3-percentage-point DA hike, a Level 1 employee who was receiving approximately Rs 10,800 as DA at 60% will now receive Rs 11,340, an increase of Rs 540, as reported by The Economic Times.
The revised DA rate of 63% will apply for July–December 2026. Employees are likely to receive DA arrears for July to October along with their salary at the end of November, as the salary calculation cycle runs from the 15th of one month to the 15th of the next.
The calculation is based on average retail inflation from July 2025 to June 2026.
DA is calculated as a percentage of basic pay, so an increase raises an employee’s salary. Transport allowance (TPTA), another salary component linked to DA, also increases. With the government announcing a hike from 60% to 63%, here’s how a Level 5 central government employee with a basic pay of Rs 29,200 could benefit.
For an employee with a basic pay of Rs 29,200, the monthly increase in DA will be Rs 876. Additional transport allowance in a higher TPTA city will be around Rs 108. The actual increase in transport allowance depends on the applicable TPTA category and rules.