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DA hike 2025: Cabinet approves 2% dearness allowance raise for central government employees
DA hike news: Cabinet approves a 2% increase in Dearness Allowance for central government employees, raising it from 53% to 55%.
DA hike news: The Cabinet on Friday gave its nod to a 2 per cent hike in Dearness Allowance or DA for central government employees, benefitting nearly 1.15 crore employees and pensioners.
Union minister Ashwini Vaishnaw, after the Cabinet meeting, said the Union Cabinet has approved the release of an additional instalment of Dearness Allowance (DA) to central government employees and Dearness Relief (DR) to pensioners with effect from January 1, 2025, representing an increase of 2 per cent over the existing rate of 53 per cent of the basic pay/pension, to compensate against price rise.
The combined impact on the exchequer on account of increase in both DA and DR would be ₹6,614.04 crore per annum.
The move will benefit about 48.66 lakh central government employees and 66.55 lakh pensioners.
With this revision, the Dearness Allowance (DA) will increase from 53% to 55%, offering a salary hike for employees ahead of the expected 8th Pay Commission.
The previous hike took place in July 2024, when DA was raised from 50% to 53%.
DA is announced bi-annually to help central government employees cope with rising inflation. It is a part of the employees' take-home salary and is calculated as a portion of their basic pay.
For example, for a base pay of ₹1 lakh, the DA would be 55% if the government announced a 2% hike, which would equate to ₹55,000.
What is Dearness Allowance (DA)?
- DA is extra money that the government and public sector employers give to their employees and pensioners to help them cope with rising prices.
- It is calculated as a percentage of the basic salary and gets revised every six months based on how much prices have gone up.
- There are two types—one for government employees and another for public sector workers.
- DA is taxable, so it has to be mentioned in income tax filings.
Impact on employee salaries
A 2% DA hike would raise the salary of an entry-level employee, a Multi Tasking Staff (MTS), with a basic pay of ₹18,000 by ₹360.
For instance, the employee with a basic pay of ₹18,000 currently receives ₹9,540 as DA (53%). A 2% hike would increase their DA to ₹9,900, adding ₹360 to their salary.
The last DA hike given to government employees in July 2024 was 3%, which had taken the DA from 50% to 53%.
