Good news for Central govt employees: Union Cabinet on Friday approved a 4 per cent increase in Dearness Allowance for Central government employees and pensioners. Dearness Allowance/Dearness Relief is based on the rise in inflation and increase in prices of essential commodities.
The hike of 4 per cent means that the monthly salary of central government employees' will go up by Rs 720 to Rs 10,000 per month.
To be noted, DA is announced twice in a year and its tenor is January to June and July to December every year.
What is Dearness Allowance (DA)
Dearness Allowance (DA) is basically a component of salary paid to government employees (Central and State). Dearness Allowance is a cost of living adjustment allowance paid to government employees and pensioners linked to the Consumer Price Index to offset the impact of inflation. DA is fully taxable.
DA is decided on the basis of the city. It varies depending on the employee's office location. DA will be more for the employees in the urban area. While for semi-urban areas and villages DA will be less.
Seventh Pay Commission is an administrative system that is set up by the Government of India to determine the salaries of government employees. It benefits per 1 crore central government employees, including around 53 lakh pensioners.