Will Centre Hike Dearness Allowance For Its Employees Ahead of Diwali? Here Are The Details

New Delhi: The central government might give approval on the hike in Dearness Allowance for government employees in its next cabinet meeting, according to several reports.  

According to a report in English daily, the central government is expected to announce an increase in both the dearness allowance (DA) and dearness relief (DR) for government employees following its cabinet meeting which will benefit lakhs of employees right ahead of the Diwali festival. 

Centre To Hike DA of Government Employees After Cabinet Meeting: Report

Earlier in March this year, Centre hiked Dearness Allowance (DA) to 50 per cent of basic pay from the existing rate of 46 per cent effective from January 1 this year, benefitting over 1 crore employees and pensioners ahead of general elections.

The Union Cabinet approved to release an additional instalment of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners from January 1, 2024, representing an increase of 4 percentage points over the existing rate of 46 per cent of the basic pay/pension, to compensate against price rise.

What is Dearness Allowance (DA) and Dearness Relief (DR)?

Dearness Allowance (DA) is a cost of living adjustment provided by the government to its employees, public sector workers, and pensioners. It is calculated as a percentage of the basic salary to mitigate the impact of inflation. 

According to the Income Tax Act of 1961, it is mandatory to declare tax liabilities related to DA when filing an Income Tax Return (ITR).

DA rates are adjusted twice a year. The government typically increases this allowance every six months, with changes implemented on January 1st for the period from January to June, and on July 1st for the period from July to December.