DA Hike 2026: Centre Approves 3% Increase, Allowance Rises to 63%

The Union Cabinet has approved a 3-percentage-point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, raising the rate from 60% to 63% of basic pay and pension, respectively. The revision will take effect retrospectively from July 1, 2026, providing financial relief to beneficiaries amid rising living costs.

According to an official press release issued by the Press Information Bureau (PIB), the decision will benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners. The combined annual financial impact on the government exchequer is estimated at ₹10,016.10 crore.

The announcement comes ahead of the festive season and follows expectations among employees and pensioners for the next instalment of the allowance.

What Has the Government Announced?

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved the additional instalment of DA and DR on October 28.

The revised rate represents a three-percentage-point increase over the existing rate of 60%. It is based on the accepted formula linked to the recommendations of the Seventh Central Pay Commission.

The government revises DA and DR to help employees and pensioners manage changes in the cost of living. While DA is paid to serving government employees, DR provides similar inflation-related relief to pensioners.

The increase will raise the DA component of an employee’s salary by an amount equivalent to 3% of their basic pay.

The actual increase in take-home salary may vary depending on the employee’s basic pay, applicable allowances and deductions.

These are illustrative calculations based on basic pay alone. They do not represent total salary or take-home pay.

DA Arrears: What Employees Should Know

Since the revised DA rate is effective from July 1, 2026, eligible employees may receive arrears for the period between the effective date and the implementation of the revised rate in their salary payments.

For example, an employee with a basic pay of ₹35,400 would be entitled to an additional ₹1,062 in DA for each eligible month under the revised rate. The final arrears amount will depend on the number of eligible months and the government’s payment arrangements.

The official announcement confirms the retrospective effective date. However, employees should refer to the relevant government order or departmental instructions for the precise payment schedule and arrears disbursement details.

Why Is Dearness Allowance Revised?

Dearness Allowance is a cost-of-living adjustment paid to government employees to help offset the impact of inflation on household expenses. It is calculated as a percentage of basic pay and is revised periodically using the prescribed formula.

The Centre generally revises DA twice a year, with changes usually taking effect from January 1 and July 1. The latest increase follows the previous 2-percentage-point revision approved in April 2026, which raised the rate from 58% to 60%, effective January 1, 2026.

The latest revision takes the allowance to 63% of basic pay.

What Does the Decision Mean for Pensioners?

The Cabinet has approved a corresponding 3-percentage-point increase in Dearness Relief for central government pensioners. The DR rate will also rise from 60% to 63% of the applicable pension amount, effective July 1, 2026.

The revision will benefit approximately 68.71 lakh pensioners, alongside 48.54 lakh serving central government employees.

Together, the two increases are expected to cost the government around ₹10,016.10 crore annually.

What Happens Next?

The next step is the implementation of the revised rates through the relevant government orders and payroll processes. Eligible employees and pensioners should check official communications from the Department of Expenditure and their respective departments for details on payment and arrears.

The latest DA and DR revision provides an additional inflation-linked payment to government employees and pensioners. However, the actual financial benefit for each individual will depend on their basic pay or pension and the number of eligible months covered by the revised rate.