The Central Government has approved a 3% hike in Dearness Allowance (DA) for its employees, raising it from 55% to 58% of the basic pay, effective from July 1, 2025.
The decision, announced through an Office Memorandum issued by the Department of Expenditure, Ministry of Finance, will benefit lakhs of Central Government employees and pensioners.
The memorandum, signed by Samir Kumar Das, Deputy Secretary to the Government of India, stated that the President has approved the revision as part of the periodic adjustment in line with the recommendations of the 7th Central Pay Commission (CPC). The revision aims to offset the impact of inflation on government employees’ earnings.
The enhanced DA rate of 58% of the Basic Pay will be applicable from 1st July 2025.
The term Basic Pay refers to the pay drawn in the prescribed level in the Pay Matrix as per 7th CPC recommendations, excluding special pay or other allowances.
The DA will remain a distinct component of remuneration and will not be treated as part of pay under Fundamental Rule (FR) 9(21).
Payments involving fractions of 50 paise and above will be rounded off to the next rupee, while fractions below 50 paise will be ignored.
The revised DA rates will be applicable to:
- Civilian employees paid from Defence Services Estimates, with expenditure chargeable to the relevant head of account.
- Armed Forces personnel and Railway employees, for whom separate orders will be issued by the respective Ministries — Defence and Railways.
- Employees under the Indian Audit and Accounts Department, after due consultation with the Comptroller and Auditor General (CAG) of India, as per Article 148(5) of the Constitution.
Dearness Allowance is revised periodically by the government to compensate for rising inflation and cost of living. The last revision, announced in April 2025, had increased the DA from 50% to 55%. This latest enhancement reflects the government’s continued commitment to protecting the real income of its employees amid ongoing inflationary pressures.
The increase in DA also impacts the Dearness Relief (DR) provided to pensioners, which is generally revised simultaneously. An official notification on the DR enhancement is expected shortly.
With this revision, government employees will see a modest but meaningful rise in their take-home pay starting July 2025. Analysts note that the move is likely to boost consumer spending and have a mild positive impact on economic activity, particularly in the run-up to the festive season.
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