DA Hike: 3% Increase in Dearness Allowance, Salary of Employees Up by Rs 750 Per Month

A 3% hike in Dearness Allowance (DA) is set to raise the DA component from 55% to 58% of basic pay. This translates to an approximate ₹750 per month increase in salary for central government employees, effective from July 1, 2025. The new rate is expected to be announced around the festival season, with arrears credited in due course.

Context and Background

Under the current 7th Pay Commission framework, DA and Dearness Relief (DR) are revised twice yearly—once for the January–June period and again for the July–December period. The January 2025 revision already increased DA from 53% to 55% .The forthcoming hike is expected to raise it further to 58% through a 3% increase.

Calculation Mechanism

DA is calculated based on the 12-month average of the Consumer Price Index for Industrial Workers (CPI‑IW), adjusted via a linking factor to the older base series. For July 2025, the average CPI‑IW is estimated at 143.6. Using the formula under the 7th Pay Commission:

DA (%) = [ (CPI-IW average × 2.88) – 261.42 ] ÷ 261.42 × 100 ≈ 58%

Effective Date & Payment Timing

• Effective Date: DA hike effective from July 1, 2025
• Announcement Timing: Typically announced in September or October, likely around Diwali
• Disbursal: Employees are expected to receive arrears along with their October salary.

Estimated Financial Impact

For an employee with a basic pay of ₹25,000:

• DA at 55% → ₹13,750 per month
• DA at 58% → ₹14,500 per month
• Monthly increase → Approx. ₹750

Significance and Next Steps

• This hike will serve as the last DA revision under the 7th Pay Commission, which concludes at the end of 2025
• The 8th Pay Commission is expected to take effect from January 2026, though implementation is likely to take 18–24 months; during this period, DA hikes will continue on the current pay structure.

Detailed Breakdown