Dearness Allowance Hiked to 55%

Centre Approves 2% DA Hike; Orders Issued for Civilian Employees Across Departments

In a welcome move for lakhs of Central Government employees, the Ministry of Finance has officially announced a Dearness Allowance (DA) hike from 53% to 55% of Basic Pay, with effect from 1st January 2025. The formal communication came through an Office Memorandum issued by the Department of Expenditure on 2nd April 2025.

The revised DA rates will be applicable to all Central Government employees drawing pay in accordance with the 7th Central Pay Commission (CPC).

Key Highlights of the DA Revision

New DA Rate: Enhanced from 53% to 55% of Basic Pay.
Effective Date: 1st January 2025.
Applicability: All Central Government civilian employees under the 7th CPC.
Arrears Payment: Will be disbursed with the salary for March 2025.

Clarifications from the Finance Ministry

As per the memorandum:

Basic Pay Definition: It refers to the pay drawn in the prescribed Level of the Pay Matrix under the 7th CPC and does not include any special pay or allowances.
Distinct Element: DA remains a separate component and shall not be treated as pay under FR 9(21).
Rounding Off: DA amounts with fractions of 50 paise or more will be rounded off to the next rupee.
No Pre-March Arrears: Arrears for the revised DA will not be paid before March 2025 salary disbursement.

Extension to Other Departments

The orders also apply to civilian employees paid from Defence Services Estimates, and the cost will be met from the respective Defence budget.
For Armed Forces and Railway employees, separate orders will be issued by the Ministry of Defence and the Ministry of Railways, respectively.
In case of employees under the Indian Audit and Accounts Department, the directive has been issued in consultation with the Comptroller and Auditor General of India, in line with Article 148(5) of the Constitution.

Background

This revision aligns with the government’s routine policy of updating Dearness Allowance every six months, based on the Consumer Price Index (CPI) to help employees cope with inflation. DA is a crucial component of salary, especially for those in the lower and middle pay brackets, as it directly impacts take-home earnings and pension calculations.

The last hike to 53% DA was implemented in October 2024.

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