The Union Cabinet on October 28 approved a 3 per cent increase in dearness allowance (DA) for central government employees and dearness relief (DR) for pensioners, according to Outlook Money. The revised rate will apply retrospectively from July 1, 2026, and will take DA and DR from 60 per cent to 63 per cent of basic pay and basic pension.
Key points
- DA and DR go up by 3 percentage points, from 60 per cent to 63 per cent, effective July 1, 2026.
- The decision covers about 48.54 lakh serving employees and 68.71 lakh pensioners.
- The government estimates the annual financial impact at Rs 10,016.10 crore.
- Arrears for July to October will be paid along with the October 2026 salary.
How the hike will reach employees and pensioners
Because the new rate applies from July 1, eligible beneficiaries will receive the difference between the old and the revised rates for July, August, September and October. This amount will be paid along with the October 2026 salary.
The arrears will differ from person to person, as they depend on each beneficiary's basic pay or pension. An employee with a higher basic pay will get a larger increase in rupees than one with a lower basic pay. Pensioners will receive a matching adjustment based on their basic pension.
What DA and DR mean
DA is counted as a percentage of an employee's basic salary, while dearness relief is calculated on a pensioner's basic pension. The hike is meant to offset the effect of inflation. The revised rate will apply to eligible beneficiaries under the central government's DA and DR framework.
The government revises DA and DR twice a year, usually in January and July. The increase depends on changes in the All India Consumer Price Index for Industrial Workers (AICPI-IW), which measures the price changes faced by industrial workers.
DA is paid in cash and is taxable. The amount that reaches an employee's account therefore depends on the applicable DA rate and basic pay, along with any relevant deductions.
What comes next
The previous revision took effect from January 1, 2026. The latest decision raises the rate by three percentage points to 63 per cent. Under the twice-yearly schedule, the next regular DA review is expected in January 2027. The size of that increase will depend on inflation data and the government's decision.
For government staff and pensioners, the arrears and the higher monthly allowance should show up in the October 2026 payment, though the exact figure will depend on individual basic pay or pension.
