The Finance Ministry has announced a 2% increase in Dearness Allowance (DA) for central government employees and pensioners. With this revision, DA has been raised from 58% earlier to 60% of basic pay now.
The hike is aimed at providing relief to employees and pensioners against rising inflation, including those in railways and defence services. The revised rate will be effective from January 1.
Around 50 lakh central government employees and about 65 lakh retired central government pensioners benefit from the DA hike. Here's all you need to know about DA revision.
Is DA Taxable?
DA is a part of the salary given by the government to help employees manage the rising cost of living. It is calculated as a percentage of basic salary or pension. So, when DA increases, employees automatically get a higher monthly salary.
Is DA Added to CTC?
For salaried employees, DA is treated as a part of their salary income, which means it is added to the total earnings and taxed according to the person's income tax slab rate. It is included in the Cost to Company (CTC). There is no exemption on DA. For pensioners, it is called Dearness Relief (DR).
Is DA Same for Each Employee?
The increase in DA differs for each employee or pensioner, as there are 18 different pay levels in the government system. The amount of DA varies because the basic salary is different at each level.
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Do Private Sector Employees Get DA?
DA is usually provided by the central government for its employees. The private sector in India has not offered the same for its employees or pensioners.
Da Hike Under 5th, 6th Pay Commission Structure
The Centre has also revised DA for employees and pensioners who are still receiving pay or pension under the older 5th and 6th Pay Commission structures. These revisions are higher in percentage terms compared to the 7th Pay Commission.
For 6th Pay Commission employees/pensioners, DA has been increased from 257% to 262%, which is a 5% increase. While for 5th Pay Commission employees/pensioners, DA has been raised from 474% to 483%, a 9% increase.
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