Dearness allowance explained

The Dearness Allowance (DA) is a calculation on inflation and allowance paid to civil servant employees (alongside public sector enterprises’ employees as public sector unit employees are also government employees but not civil servants), some private sector employees and civil servant pensioners in India.

Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. Indian citizens may receive a basic salary or pension that is then supplemented by a housing or a dearness allowance, or both. The guidelines that govern the Dearness Allowance vary according to where one lives. Dearness Allowance is a fully taxable allowance.The two types of Dearness Allowance are:

History

The Dearness Allowance was introduced following the second World War, and was then known as the "Dear Food Allowance". The "Old Textile Allowance" was also introduced in 1947, though this was revised and reintroduced in 1953 as the "Revised Textile Allowance".[1] Initially DA was given in response to demand of employees for wage revision. Later it was linked to Consumer Price Index.In the past various committees have been constituted to look into the issue of payment of D.A. to Central Government employees.
The III Central Pay Commission recommended payment of DA whenever the CPI rose by 8 points over the index of 200 (with base 1960 = 100). The extent of neutralisation granted with effect from 1-1-1973 ranged from 100% to 35%.
The IV Central Pay Commission recommended the grant of DA on a 'percentage system' of the basic pay (1986).It also recommended payment of DA twice a year; 1 January and 1 July.Each instalment of DA was to be calculated with reference to the percentage increase in the 12 monthly average of All India Consumer Price Index (base 1960). The extent of neutralisation now ranged from 100% to 65%.
The V Central Pay Commission looked into the issue of differential neutralisation and found it to be injustice to senior officers and recommended uniform neutralization of 100% to employees at all levels.[2] The Commission had suggested that dearness allowance should be converted into dearness pay every time the cost of living rises by 50% over the base level.[3]
The VI Central Pay Commission recommended revision of base year of the Consumer Price Index (CPI) as frequently as feasible.It also changed base year for DA calculation to 2001 (base year 2001=100)[3]

Calculation sheet

Formula for calculating Dearness Allowance for Central government employees after 1.1.2006 is :

Dearness Allowance %= *100

In October 2021, the government revised the Consumer Price Index-IW base year from 2001 to 2016.[4] A linking factor of 2.88 was defined for converting the new series with the base 2016=100 to the previous series on base 2001=100. Based on this, the DA is currently calculated with the following formula

DA  = (A  – 261.4)*100/(261.4) Where A = Avg of CPI-IW (base 2016=100) for the past 12 months x linking factor of 2.88[5]

Formula for calculating Dearness Allowance for Central public sector employees after 1.1.2007 is :

Dearness Allowance %= *100

Dearness allowance with effect from January or July of a particular year in the future, once the for a particular month is published by the Government, whereas for PSU employees it is declared quarterly by DPE (Department of Public Enterprise).

Beginning 1 January 1996, the Dearness Allowance is granted to compensate for price increases to which the revised pay scales relate. This will be reviewed twice a year, on 1 January and 1 July.

The following table shows All India Consumer Price Index since 1.1.2006 with Base year 2001=100[6]

Year Jan Feb March April May June July Aug Sept Oct Nov Dec Average
2006 119 119 119 120 121 123 124 124 125 127 127 127 123
2007127128127128129130132133133134134134131
2008134135137138139140143145146148148147141.66
2009148148148150151153160162163165168169157
2010172170170170172174178178179181182185175.9
2011188185185186187189193194197198199197191.5
2012198199201205206208212214215217218219209.33
2013221223224226228231235237238241243239232.16
2014237238239242[7] 244 246 252 253 253 253 253 253246.91
2015254 253254256258[8] 261 263[9] 264[10] 266269270 269 261.42
2016269267 268 271275[11] 277[12] 280[13] 278[14] 277278277 275[15] 274.33
2017274274[16] 275277 278 280[17] 285[18] 285[19] [20] 285[21] 287[22] [23] 288 286281.167
2018288 287287[24] 288289 291[25] 301301 301 302 302 301[26] 294.33
2019307[27] 314[28] 320[29] 322 325328
The DA Rate for Industrial Workers (since 1.1.2007 with Base year 2001=100) for 3rd Quarter (Sep-Dec), 2015 has been declared as 107.9% and that of 4th Quarter (Jan-Mar), 2016 is 112.40%.

The Vth Pay Commission recommendations were implemented since 1.1.1996 and consequently DA rate wef 1.1.1996 became 0. Further in 1994 Central Government merged 50% of the Dearness Allowance (DA) with the basic pay w.e.f. 01.04.2004 and the Dearness Allowance continued to be calculated with reference to the AICPI (IW) average as on 1 January 1996 of 306.33 without changing the index base consequent to the merger. Accordingly, Dearness Allowance (DA) as mentioned in table below were sanctioned from 01.07.2004 till 01.07.2007.[30]

Year199619961997199719981998199919992000200020012001200220022003200320042004200520052006200620072007
MonthJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan July
DA %048131622323738414345495255596164677174798591
DA% after 50% merger in 1.3.2004-----------------14172124293541

DA rate as applicable after implementation of VIth Pay Commission recommendations wef from 1.1.2006 is shown in table below :-

Year20062006'07'07'08'08'09'0920102010'11'11'12'12'13'13'14'14'15'15'16'16'17'17'18'18'19'19
MonthJan JulyJan JulJan JulJan JulJan JulJan JulJan JulJan JulJanJulJanJulJanJulJanJulJanJulJanJul
DA %0269121622273545515865728090100107113119125 132136[31] 139142[32] 148154164

DA rate as applicable after implementation of VIIth Pay Commission recommendations wef from 1.1.2016 is shown in table below :-

Year201620162017201720182018201920192020202020212021202220222023202320242024202520252026
MonthJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJanJulyJanJulyJan
DA %0245[33] 7[34] 9[35] 12[36] 17[37] [38] 17171731[39] 34[40] 38[41] 42[42] 46[43] [44] 50[45]

Print media workers

For print media workers the Government of India has notified a DA Formula in the Gazette No 2532(E) of Nov 11, 2011, as recommended by the Majithia Wage Board for Journalists and Non-Journalists. The said Gazette notified formula was subsequently upheld by the Supreme Court of India by its judgment made on Feb 7, 2014. The Hon. Supreme Court upheld the recommendations as 'revised and determined' by Hon Justice (retd) Majithia. While 115.76 is the Base and Divisor for Central Government staff, for employees coming under Majithia Wage Board 167 had been recommended as Base and Divisor. The said 167 is the 12-month average of July 1, 2009 to June 30, 2010.

The average for the current DA period January to December 2017 is 274, which is the 12-month average AICPI-IW of Jan 1, 2016 to December 31, 2016. The DA calculation for Jan 2017 to June 2017 is 274 minus 167 * Basic Pay and the result divided by 167. Total points 107.

7th Pay Commission

Dearness allowance rate applicable after implementation of 7th Pay Commission recommendations wef from 1.1.2016 as shown in above table. Accordingly the Nodal Authority Department of Expenditure, Ministry of Finance, Govt of India has issued the Office Memorandum as shown below:-

Year2016201620172017201820182019201920202020202120212022202220232023 2024202420252025
MonthJan JulyJan JulyJan JulyJan JulyJan JulyJan JulyJanJulyJanJulyJanJulyJanJuly
DA %02[46] 4[47] 5[48] 7[49] 9[50] 12[51] 17[52] 17[53] 171728[54] 31[55] 34[56] 38424650[57]

Pensioners

Both pensioners and their families are granted DA and this continues following reemployment with the Central or State Government, a Government undertaking, an autonomous body or a local body; that is, DA is allowed in addition to a recipient's fixed pay or "time scale". In other cases of reemployment, access to DA is subject to the limit of emoluments last drawn.

DA is not allowed during a pensioner's time overseas if employment is undertaken. It remains accessible to overseas pensioners whilst the recipient is not employed.

From 1 October 1984 to date, pensioners are paid DA at a certain percentage of basic pension. The allowance is calculated on the original pension without commutation. From 1 July 1986 the percentage has been revised every six months based on the cost of living to 80 DA may be allowance.

References

DA Calculator for PSU employeesDA Calculator for CG employees

Time Interval for revision of dearness allowance

Confirm! DA/DR from July, 2019: 5% increase in 7th CPC DA @17% and 10% increase in 6th CPC DA @ 164%

External links

Notes and References

  1. Web site: Dearness Allowance. Scribd. Scribd Inc. 20 June 2012. ashish_pilania_1. 2012.
  2. Web site: 18 . 2014-05-17 . dead . https://web.archive.org/web/20100619203149/http://www.kar.nic.in/fnjpc/da_persp.html . 2010-06-19 .
  3. Web site: Archived copy . www.finmin.nic.in . 22 May 2022 . https://web.archive.org/web/20120907065638/http://www.finmin.nic.in/6cpc/6cpcreport.pdf . 7 September 2012 . dead.
  4. Web site: Consumer Price Index-IW base year revised from 2001 to 2016. 2021-12-24. Staffcorner.com. en.
  5. Web site: New DA calculation formula as per the AI CPI-IW series with base 2016. 2021-12-24. Staffcorner.com. en.
  6. Web site: Statistical Data for Labour . 2014-05-13 . dead . https://web.archive.org/web/20140514000847/http://labourbureau.nic.in/indtab.html . 2014-05-14 .
  7. Web site: Index Numbers Page . 2014-06-28 . dead . https://web.archive.org/web/20140702122033/http://labourbureau.nic.in/indnum.htm . 2014-07-02 .
  8. Web site: 119% DA-DR from July, 2015 confirmed after 2 points increase in May, 2015 AICPIN | Central Govt Employees News - 7th Pay Commission - Staff News. 30 June 2015.
  9. Web site: Archived copy . 2015-09-14 . https://web.archive.org/web/20151001204856/http://labourbureau.nic.in/MIL_JUL_2015_EH.pdf . 2015-10-01 . dead .
  10. Web site: Archived copy . 2015-10-01 . https://web.archive.org/web/20151001215702/http://labourbureau.nic.in/MIL_AUG_2015_EH.pdf . 2015-10-01 . dead .
  11. Web site: Archived copy . 2016-06-30 . https://web.archive.org/web/20160705153910/http://www.labourbureau.nic.in/MIL_CPI_IW_May_2016_EH.pdf . 2016-07-05 . dead .
  12. Web site: Archived copy . 2016-07-30 . https://web.archive.org/web/20160804073105/http://labourbureau.nic.in/MIL_CPI_IW_June_2016_EH.pdf . 2016-08-04 . dead .
  13. Web site: Archived copy . 2016-09-01 . https://web.archive.org/web/20160909231616/http://labourbureau.nic.in/MIL_CPI_IW_JULY_2016_EH.pdf . 2016-09-09 . dead .
  14. Web site: Archived copy . 2016-10-01 . https://web.archive.org/web/20161003085440/http://labourbureau.nic.in/MIL_CPI_IW_AUG_2016_EH.pdf . 2016-10-03 . dead .
  15. http://labourbureaunew.gov.in/All_India_gp_subgp_indices_Dec_2016.pdf India GP Indices
  16. http://labourbureaunew.gov.in/All_India_gp_subgp_indices_Feb_2017.pdf India GP Indices
  17. http://labourbureaunew.gov.in/MIL_CPI_IW_JUN_2017_EH.pdf Data June 2017
  18. http://labourbureaunew.gov.in/MIL_CPI_IW_JUL_2017_EH.pdf Data July 2017
  19. http://labourbureaunew.gov.in/MIL_CPI_IW_AUG_2017_EH.pdf Data August 2017
  20. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Expected DA from January 2018 - Aicpin for the month of August 2017 released . 2017-09-30. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045602/https://www.stafftoday.in/2017/09/expected-da-from-january-2018-aicpin.html/. dead.
  21. http://labourbureaunew.gov.in/MIL_CPI_IW_SEP_2017_EH.pdf Data September 2017
  22. http://labourbureaunew.gov.in/MIL_CPI_IW_OCT_2017_EH.pdf Data October 2017
  23. Web site: StaffToday - CG Employee News, Rules, O.M & Notification CPI(IW) Index of Oct, 17 released : Expected DA from January 2018 @ 7% for 7th CPC & @ 143% for 6th CPC . 2017-12-04. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045603/https://www.stafftoday.in/2017/12/cpiiw-index-of-oct-17-released-expected.html/. dead.
  24. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Expected DA : AICPIN for the month of March 2018 . 2018-04-28. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045600/https://www.stafftoday.in/2018/04/expected-da-aicpin-for-month-of-marc.html/. dead.
  25. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Consumer Price Index for Industrial Workers (CPI-IW) — June, 2018 : Ministry of Labour & Employment Press Release . 2018-08-01. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045601/https://www.stafftoday.in/2018/08/consumer-price-index-for-industria.html/. dead.
  26. Web site: StaffToday - CG Employee News, Rules, O.M & Notification प्रतिशतता में कोई बदलाव नहीं अखिल-भारत उपभोक्ता मूल्य सूचकांक - दिसम्बर, 2018 / No Change in percentage All India Consumer Price Index - December, 2018 . 2019-01-31. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045559/https://www.stafftoday.in/2019/01/no-change-in-percentate-aicpin-december-2018.html/. dead.
  27. Web site: StaffToday - CG Employee News, Rules, O.M & Notification DA: No change in percentage - AICPIN for the Month of February 2019 . 2019-03-29. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045559/https://www.stafftoday.in/2019/03/da-no-change-in-percentage-aicpin-for.html/. dead.
  28. Web site: StaffToday - CG Employee News, Rules, O.M & Notification AICPIN for May 2019 pegged at 314 by increasing 2 points - Labour Bureau . 2019-06-30. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045559/https://www.stafftoday.in/2019/06/aicpin-for-may-2019-pegged-at-314-by.html/. dead.
  29. Web site: CPI-IW for August 2019 increased by 1 point. stafftoday. Author. 2019-09-30. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101045604/https://www.stafftoday.in/2019/09/cpi-iw-increased-by-1-point.html/. dead.
  30. Web site: Referencer | DA Rates (Dearness Allowances Rates).
  31. Web site: Sixth CPC DA enhanced from 125 to 132 % from 1st July 2016. 10 November 2016 .
  32. Web site: Dearness Allowance/DEPARTMENT OF Expenditure | Ministry of Finance |Government of India.
  33. Web site: 2017-09-20 . Dearness Allowance from July, 2017 @ 5%: Finance Ministry Order . en-US.
  34. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Dearness Allowance revised from 5% to 7% wef January 2018 . 2018-03-15. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101090336/https://www.stafftoday.in/2018/03/dearness-allowance-revised-from-5-to-7.html/. dead.
  35. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Dearness Allowance from 01 July 2018 @ 9%: Department of Expenditure Order . 2018-09-09. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101090338/https://www.stafftoday.in/2018/09/dearness-allowance-from-01-july-2018-9.html/. dead.
  36. Web site: StaffToday - CG Employee News, Rules, O.M & Notification Dearness Allowance @ 12% from January 2019 - Department of Expenditure Order . 2019-02-27. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-11-01. https://web.archive.org/web/20191101090337/https://www.stafftoday.in/2019/02/dearness-allowance-12-from-january-2019.html/. dead.
  37. Web site: Confirm! DA/DR from July, 2019: 5% increase in 7th CPC DA @17% and 10% increase in 6th CPC DA @ 164%. Kumari. Kiran. Central Government Employee News and Tools. 31 July 2019. 2019-08-01.
  38. Web site: Dearness Allowance @ 17% w.e.f. 01.07.2019 Stafftoday. 2019-10-14. StaffToday - CG Employee News, Rules, O.M & Notification. en-US. 2019-11-01. 2019-10-31. https://web.archive.org/web/20191031184931/https://www.stafftoday.in/2019/10/grant-of-dearness-allowance-17-w-e-f-1st-july-2019-order-issued.html/. dead.
  39. Web site: Diwali bonanza: Dearness Allowance hiked by 3% to 31%. 2021-12-24. Staffcorner.com. en.
  40. Web site: Cabinet approves January 2022 Dearness Allowance (DA) hike by 3% to 34% . 2022-03-31 . Staffcorner.com . en.
  41. Web site: October 18, 2023 . Cabinet approves 4% hike in Dearness Allowance . 2023-10-18 . Press Information Bureau (PIB) . en.
  42. Web site: Union Cabinet clears 4% dearness allowance hike from Jan 2023 . 2023-03-24 . Staffcorner.com . en.
  43. News: October 18, 2023 . Cabinet approves release of an additional instalment of Dearness Allowance and Dearness Relief due from 01.07.2023 . Press Information Bureau (PIB) .
  44. Web site: Finally, cabinet approves Dearness Allowance (DA) hike from July 2023 . 2023-10-22 . Staffcorner.com . en.
  45. Web site: Expected Dearness Allowance (DA) from January 2024 Calculator . 2023-10-22 . Staffcorner.com . en.
  46. Web site: Kumari . Kiran . 2016-11-04 . Dearness Allowance from July, 2016 @ 2%:Order issued StaffNews . 2022-04-03 . en-US.
  47. Web site: Kumari . Kiran . 2017-03-30 . 7th CPC Dearness Allowance from Jan, 2017 @ 4%: Finance Ministry OM dated 30.03.2017 StaffNews . 2022-04-03 . en-US.
  48. Web site: Kumari . Kiran . 2017-09-20 . Dearness Allowance from July, 2017 @ 5%: Finance Ministry Order StaffNews . 2022-04-03 . en-US.
  49. Web site: Kumari . Kiran . 2018-03-16 . Dearness Allowance from Jan 2018 @ 7%: Finance Ministry's Order StaffNews . 2022-04-03 . en-US.
  50. Web site: Kumari . Kiran . 2018-09-07 . Dearness Allowance from July, 2018 @ 9%: Department of Expenditure Order StaffNews . 2022-04-03 . en-US.
  51. Web site: Kumari . Kiran . 2019-02-28 . 7th CPC Dearness Allowance from January, 2019 hike from 9% to 12% - Department of Expenditure, MoF Order StaffNews . 2022-04-03 . en-US.
  52. Web site: Kumari . Kiran . 2019-10-15 . Revised DA from July, 2019 @ 17% - Order issued by Finance Ministry StaffNews . 2022-04-03 . en-US.
  53. Web site: Kumari . Kiran . 2020-04-23 . Freezing of Dearness Allowance and Dearness Relief at current rates till July 2021 महंगाई भत्ते और महंगाई राहत की मौजूदा दरों को जुलाई 2021 तक रोकने के संबंध में StaffNews . 2022-04-03 . en-US.
  54. Web site: Kumari . Kiran . 2021-07-20 . Revised rates of Dearness Allowance w.e.f. 01.07.2021: Fin Min DoE Order 20.07.2021 StaffNews . 2022-04-03 . en-US.
  55. Web site: Kumari . Kiran . 2021-10-25 . Revision of Rate of Dearness Allowance (DA) due from 01.07.2021- Enhanced 3% from 28% to 31%: DoE OM StaffNews . 2022-04-03 . en-US.
  56. Web site: Kumari . Kiran . 2022-03-31 . Dearness Allowance - Revised Rates effective from 01.01.2022: DoE OM dated 31.03.2022 StaffNews . 2022-04-03 . en-US.
  57. Web site: Expected Dearness Allowance (DA) from January 2024 Calculator . 2023-10-22 . Staffcorner.com . en.

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