The new rate of dearness allowance will now be 34 percent from the earlier 31 percent. This increase in DA is as per the accepted formula based on the recommendations of the 7th Central Pay Commission. The Union Cabinet on Wednesday approved 34% Dearness Allowance (DA) to central government employees and dearness relief for pensioners.
new Delhi . The Union Cabinet on Wednesday approved 34% Dearness Allowance (DA) to central government employees and dearness relief for pensioners. The decision to increase DA by 3% will be effective from January 1, 2022. The new rate of dearness allowance will now be 34 percent from the earlier 31 percent. This increase in DA is as per the accepted formula based on the recommendations of the 7th Central Pay Commission.
How to calculate DA
DA will be calculated on the basis of All India Consumer Price Index for the months of 2021. DA for Central Government employees was earlier calculated on the basis of Consumer Price Index with the base year 2001. The government replaced it with a new Consumer Price Index with the base year 2016 to calculate DA from September 2020. This linking factor will be used to determine the Dearness Allowance of Central Government employees and pensioners.
If a central government employee gets Rs 18,000 per month, then the DA in his salary will increase by 3%. With 34% DA, the employee will see a jump of Rs 6,120 in monthly salary. DA is linked to basic pay. So, the increase in DA will also increase the monthly provident fund (PF) and gratuity amount of central government employees.
5 key things to know about DA hike…
1. The Cabinet announced that the combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs 9,544.50 crore per annum. The new rate will be applicable from January 1, 2022.
2. The cabinet said, “This increase is as per the approved formula, which is based on the recommendations of the 7th Central Pay Commission.”
3. The increase in DA will benefit about 47.68 lakh central government employees and 68.62 lakh pensioners.
4. Dearness Allowance means the allowance given by the Government to its employees as well as pensioners to prevent the effect of dearness.
5. The government had temporarily stopped these allowances in 2020 due to shortfall in revenue collection as the coronavirus pandemic ravaged the economy.
