Centre approves 2% DA hike for central govt employees, pensioners:Know how much salary hike will employees receive?

The Union Cabinet on Saturday, April 18, approved a 2% hike in Dearness Allowance (DA) for central government employees and pensioners, raising it from 58% to 60% of basic pay. The revision, effective from January 2026, will also apply to pensioners through a corresponding increase in Dearness Relief (DR), leading to higher monthly payouts. Dearness Allowance is a cost-of-living adjustment provided to government employees and pensioners to offset the impact of inflation. Modest relief amid calls for broader pay overhaul The hike offers limited relief at a time when employee unions are pressing for a comprehensive revision of salaries under the proposed 8th Pay Commission. The National Council–Joint Consultative Machinery (NC-JCM) has submitted a memorandum seeking a significantly higher fitment factor of 3.83. If accepted, the proposal could raise the minimum basic pay from ₹18,000 to ₹69,000 about triggering a substantial restructuring of the overall pay framework. The government, however, has not taken a final decision on the demand. Impact on employees and pensioners With the latest revision, both serving employees and retired personnel will see an increase in their monthly income. For pensioners, any increase in basic pay, if approved under future pay commission recommendations, would have a direct bearing on payouts: How much salary hike is expected with 2% DA/DR hike? Over 1 crore employees, pensioners likely to benefit from modest increase in monthly income A 2% hike in Dearness Allowance (DA) and Dearness Relief (DR) is expected to provide a modest increase in the salaries of government employees and pensioners. The revision is likely to benefit over one crore individuals across the country. As per estimates, an employee with a basic salary of ₹40,000 could see a monthly increase of around ₹800 following the hike, offering some relief amid rising living costs. Example: Basic pay ₹40,000 Old DA (58%) = ₹23,200 New DA (60%) = ₹24000 Increase = ₹800/month Previous revision and trend The DA was last revised in October, when it was increased by 3% (from 55% to 58%), effective July 1, 2025. Arrears for the intervening period were paid to both employees and pensioners. It is important to note that the DA revisions are typically carried out twice a year, in January and July, based on movements in the Consumer Price Index (CPI). What DA means and how it is taxed The DA forms part of salary income and is fully taxable. It is calculated as a percentage of basic pay and must be declared separately while filing income tax returns. What changes under the 8th Pay Commission Under the current system, DA continues to be revised periodically. However, once the 8th Central Pay Commission is implemented, the existing DA is likely to be merged with basic pay, effectively resetting the allowance to zero before fresh calculations begin.