Dearness Allowance (DA): 60% From January 2026
Dearness Allowance (DA) is an inflation-linked part of a central government salary, paid as a percentage of basic pay and revised twice a year, in January and July, against the All-India Consumer Price Index for Industrial Workers. As of 1 January 2026, DA is 60% of basic pay, after the Union Cabinet cleared a 2% rise over the earlier 58%. The equivalent paid to pensioners is Dearness Relief.
What dearness allowance is
Dearness allowance is the part of a central government salary that tracks the cost of living. Basic pay, fixed by the Pay Commission , stays flat between commissions, but prices do not. DA bridges the gap. It is expressed as a percentage of basic pay and is added on top of it, so a rise in the DA percentage lifts the salary of every employee in proportion to their basic pay.
DA applies to serving central government employees and to defence and railway personnel under parallel orders. Pensioners receive the same percentage as Dearness Relief on their basic pension, so the two move together. State governments run their own DA, usually tracking the central rate with a lag, which is why a state employee’s DA can differ from the central figure in any given month.
The current rate: 60% from January 2026
DA is 60% of basic pay with effect from 1 January 2026. The Union Cabinet, chaired by the Prime Minister, approved a 2% increase over the existing 58% in April 2026, and the Department of Expenditure issued the implementing order, with arrears paid from 1 January 2026. The official release put the benefit at about 50 lakh central government employees and around 68 lakh pensioners, and the combined annual cost on DA and DR at roughly Rs 6,791 crore.
For an employee at the Level 1 minimum basic pay of Rs 18,000, 60% DA is Rs 10,800 a month. For someone on a basic of Rs 56,100 at Level 10, it is Rs 33,660. DA is calculated only on basic pay, not on basic plus allowances, so HRA and transport allowance are excluded from the DA base.
The next revision is due with effect from 1 July 2026 and will be set from the consumer price trend over the qualifying months. The government has stated there is no proposal to merge DA into basic pay despite the rate reaching 60%; revisions continue under the existing system until the 8th Pay Commission recommendations are implemented.
How DA is calculated: the AICPI-IW formula
The DA percentage is not chosen at will. It is computed from the All-India Consumer Price Index for Industrial Workers, published monthly by the Labour Bureau, with the current series on base year 2016 equal to 100. The 7th CPC fixed the formula that converts the index into a percentage:
DA% = ((12-month average of AICPI-IW with base 2016=100) minus 261.42) divided by 261.42, multiplied by 100
The base index of 261.42 is the average index at which the 7th CPC structure started, when DA was zero on 1 January 2016. As the 12-month average index rises above that base, the formula yields a higher DA percentage. The result is taken to the whole number, so a computed 60.34% is announced as 60%. Because the index for the qualifying months is published with a lag, the DA orders typically come a few months after the effective date, with arrears made good from 1 January or 1 July.
This index linkage is what makes DA an automatic inflation adjustment rather than a discretionary bonus. When the cost of living rises for industrial workers, the index rises, and the formula moves DA up at the next revision.
DA rate history under the 7th Pay Commission
The 7th CPC structure began with DA at zero on 1 January 2016 and has climbed with each half-yearly revision. The recent trajectory:
| Effective date | DA rate |
|---|---|
| 1 January 2024 | 50% |
| 1 July 2024 | 53% |
| 1 January 2025 | 55% |
| 1 July 2025 | 58% |
| 1 January 2026 | 60% |
DA crossed the 50% mark on 1 January 2024. That threshold did not trigger any merger of DA into basic pay; it did trigger the step-up in house rent allowance rates, which are linked to DA crossing 25% and 50%.
DA and the HRA link
House rent allowance under the 7th CPC is set at 24%, 16% and 8% of basic pay for X, Y and Z class cities, with two built-in step-ups tied to DA. When DA crosses 25%, the rates rise to 27%, 18% and 9%. When DA crosses 50%, they rise again to 30%, 20% and 10%. Because DA passed 50% on 1 January 2024, the current HRA rates are 30%, 20% and 10%. The mechanics, the city classification and worked examples are on the HRA in the 7th Pay Commission page.
DA versus Dearness Relief
The terms describe the same inflation adjustment for different groups. Serving employees receive Dearness Allowance on basic pay. Pensioners receive Dearness Relief on basic pension. The percentage is identical and is revised on the same dates. So when DA moved to 60% from 1 January 2026, DR for pensioners moved to 60% as well. Pensioners under the older defined-benefit framework get DR on their full basic pension; the treatment for those under the National Pension System and the Unified Pension Scheme differs, because their payout structure differs.
What happens to DA at a new Pay Commission
There is a common misconception that DA merges into basic pay once it touches 50%. No such automatic rule exists, and the 1 January 2024 crossing of 50% did not cause a merger. What does happen is a reset at the start of a new Pay Commission. When a commission applies its fitment factor to revise basic pay, the accumulated DA is effectively absorbed into the higher basic, and DA restarts from zero against the new basic. That is what occurred on 1 January 2016 under the 7th CPC.
The 8th Pay Commission , constituted on 3 November 2025, is expected to follow the same convention, with DA resetting to zero when its revised pay takes effect. But the effective date, the fitment factor and the precise DA treatment are not yet announced, so the reset is an expectation, not a confirmed rule. Anyone estimating an 8th CPC salary should account for DA restarting at zero, which means the headline rise in basic does not all reach take-home pay at once.
Is DA taxable?
Yes. Dearness allowance is fully taxable as part of salary income for central government employees, and Dearness Relief is taxable as part of pension. DA is added to gross salary and taxed at slab rates under both the old tax regime and the new tax regime . There is no separate exemption for DA itself, although the broader standard deduction and regime-specific slabs apply to the salary as a whole. For the wider picture of how salary components are taxed, see income tax in India .
See also
- Pay Commission in India
- 7th Pay Commission
- 8th Pay Commission
- Fitment factor
- 8th CPC fitment factor
- HRA in the 7th Pay Commission
- 7th CPC pay matrix
- Basic pay for government employees
- Government allowances
- Transport allowance
- 8th Pay Commission salary method
- Government pension
- National Pension System
- Income tax in India
- Central government employees in India
External references
- Press Information Bureau
- PM India: Cabinet approves additional instalment of DA w.e.f. 01.01.2026
- Department of Expenditure, Ministry of Finance
- Labour Bureau (AICPI-IW data)
References
- PM India / Press Information Bureau, “Cabinet approves additional instalment of Dearness Allowance to Central Government employees and Dearness Relief to pensioners w.e.f. 01.01.2026”, April 2026.
- Ministry of Finance, Department of Expenditure, Office Memorandum revising DA to 60% with effect from 1 January 2026.
- Report of the Seventh Central Pay Commission, November 2015, dearness allowance formula and base index 261.42.
- Labour Bureau, All-India Consumer Price Index for Industrial Workers (base 2016=100), monthly releases.
Last verified: 30 June 2026. Current DA confirmed at 60% with effect from 1 January 2026 via the PM India / PIB Cabinet release and the Department of Expenditure order; the next revision is due with effect from 1 July 2026.