The central government can give a big gift to the employees during the festive season. Before the implementation of the 8th Pay Commission, the dearness allowance (DA) of the employees and dearness relief (DR) for pensioners can be increased once again, which will benefit more than 1.2 crore central employees and pensioners.
The central government may increase the dearness allowance in the first week of October, just before Diwali. With this change, DA for employees will increase from 55 percent to 58 percent, which will be applicable from July 2025.
Employees and pensioners will also get three months’ arrears, which is expected to be paid with the October salary, said a Financial Express report.
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Increase in dearness allowance in 2025
The government changes the dearness allowance twice a year. Once before Holi for the period of January-June and second time before Diwali for the period of July-December. Last year, the central government had announced an increase in dearness allowance on October 16, 2024, about 2 weeks before the festival. This year Diwali is falling on October 20-21.
How is DA calculated?
Under the Seventh Pay Commission, dearness allowance is determined on the basis of the Consumer Price Index (CPI-IW). This formula is based on the 12-month average of CPI-IW data. From July 2024 to June 2025, the average CPI-IW was 143.6, which is equivalent to a dearness allowance rate of 58%. This means that the dearness allowance of central government employees will increase by three percent during the July-December 2025 circle.
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Pension and salary will increase
If the basic salary of an employee is Rs 50,000, then the allowance at the old DA of 55% will be Rs 27,500. At the same time, with the new DA of 58% after the increase, it will increase to Rs 29,000 i.e. now the employee will take home Rs 1,500 extra every month. Similarly, for a pensioner with a basic pension of Rs 30000, the DR will increase from Rs 16,500 (55%) to Rs 17,400 (58%), which will give them Rs 900 extra every month.
Final hike under 7th Pay Commission
This revision is also notable because it will be the last DA hike under the 7th Pay Commission, which expires on December 31, 2025. The government has already announced the 8th Pay Commission in January 2025, but its Terms of Reference (TOR), chairman and members are yet to be finalised.
