The Union Cabinet approved a 3% hike in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners, effective from July 1, 2025. This raises the DA/DR from 55% to 58% of the Basic Pay/Pension under the 7th Central Pay Commission (CPC) formula. This increase will benefit about 49.2 lakh central government employees and 68.7 lakh pensioners, with an estimated annual financial impact of ₹10,083.96 crore on the exchequer.
Details of DA Hike 2025
| Parameter | Details |
|---|---|
| DA Rate before hike | 55% of Basic Pay/Pension |
| DA Rate after hike | 58% of Basic Pay/Pension |
| Effective Date | July 1, 2025 |
| Beneficiaries | 49.2 lakh Central Govt employees, 68.7 lakh pensioners |
| Financial Impact on Exchequer | ₹10,083.96 crore annually |
| Basis | 7th Central Pay Commission formula |
The DA increase is a biannual cost-of-living adjustment to offset inflation, enhancing the monthly income of employees and pensioners accordingly. Arrears for the period from July to October 2025 will be paid with the October salary.
How will the 3% DA hike affect my monthly pay calculation from July 2025
The 3% Dearness Allowance (DA) hike effective from July 2025 means your DA rate has increased from 55% to 58% of your basic pay. This increase will reflect in your monthly salary starting July 2025, increasing the DA component of your pay.
How to Calculate Your Revised Monthly Pay with the 3% DA Hike:
- Know your Basic Pay: This is your fixed monthly salary excluding allowances.
- Calculate New DA Amount: Multiply your Basic Pay by 58% (0.58).
- Calculate Old DA Amount: Multiply your Basic Pay by 55% (0.55) for comparison.
- Find the Increment in DA: New DA – Old DA.
- Calculate Revised Monthly Pay: Basic Pay + New DA + Other Allowances.
Example Calculation:
If your Basic Pay is ₹50,000:
- Old DA = 50,000 x 55% = ₹27,500
- New DA = 50,000 x 58% = ₹29,000
- DA Increase = ₹29,000 – ₹27,500 = ₹1,500 extra per month
- Revised monthly pay will increase by ₹1,500 plus your usual basic pay and other allowances.
Arrears from July 2025 to October 2025 will be paid along with your October salary, giving you a lump sum for the increase during this period.
This hike will raise the disposable income of central government employees and pensioners, cushioning inflation effects from July 2025 onwards.
The revised Dearness Allowance (DA) percentage for pensioners is 58% of the basic pension. This DA hike is effective from July 1, 2025, and will be paid as Dearness Relief (DR) to all eligible central government pensioners from this date onward.
However, certain employee groups are excluded or treated differently:
- Defence Personnel and Armed Forces: DA applicable to armed forces personnel is determined separately by the Ministry of Defence and may not follow the same schedule or rates as civilians.
- Employees under Different Pay Commissions: Employees governed by pay structures outside the 7th CPC, such as older pay commissions still operational in some departments or autonomous bodies, may have different DA arrangements.
- State Government Employees: The DA hike approved here applies only to central government employees and pensioners. State government employees’ DA is decided by their respective state governments and may differ.
- Contractual and Temporary Staff: Those on contractual, daily wages, or temporary employment may not be eligible for DA hikes tied to the central pay structure unless explicitly provided by their employer.
- Employees under Certain Autonomous Bodies or PSU: Some autonomous organizations and Public Sector Undertakings (PSUs) may have separate DA revision patterns, not always synchronized with central government hikes.
