If you are a central government employee or have retired, the government may soon increase dearness allowance (DA) and dearness relief (DR). Experts believe that the government may announce the biennial review of DA in the coming week.
Dearness allowance expected to increase from 2% to 4%
According to experts, DA and DR may increase by 2% to 4% effective from January 1, 2025. If the increase is only 2%, it will be one of the lowest increases in the last 7 years. At the same time, some experts expect an increase of 3% to 4%.
Currently, DA is 53%, and a 2% increase will take it to 55%. If an employee’s basic salary is ₹20,000, a 2% increase will give him ₹400 more per month.
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How is dearness allowance determined
DA is calculated based on the All India Consumer Price Index (AICPI-IW). This data is published by the Labor Bureau and the government decides the rate by reviewing the data of the last 6 months.
Announcement of 8th Pay Commission and change in fitment factor
In January this year, Prime Minister Narendra Modi approved the formation of the 8th Pay Commission. This pay commission will come into effect from January 1, 2026 and there are possibilities of salary hike in it.
Know how much the salary will increase
The fitment factor is the multiplier by which the basic salary is increased. In the present 7th Pay Commission it was given 2.57 fitment factor approved. In the 8th Pay Commission it is likely to be between 2.6 to 2.85. This can increase the salary by 25% to 30%. If the fitment factor is made 2.8, the basic salary of ₹18,000 can increase to ₹50,000.
Know what will be the impact on pension and EPF
There are reports that DA will be reset to 0 under the 8th Pay Commission and it will be added to the basic salary. However, the biennial review of DA will continue. According to experts, “The recommendations of the 8th Pay Commission will be introduced by March 2025 and the new pay scales will be implemented under the ‘Central Civil Services (Revised Payment) Rules, 2025’.” There may also be many changes in the facilities like pension, EPF, and gratuity respectively.
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