Understand about DA: What is Dearness allowance and how it is calculated?

Recently, the central government has approved an increase in the dearness allowance (DA) to the central employees. Earlier DA was 17%, which has been increased to 28%. Union Minister Anurag Thakur gave this information after the meeting of the Union Cabinet. And this decision will be applicable from July 1, 2021. This will put a burden of Rs. 34,401 crore on the treasury every year

More than 48 lakh central employees and more than 65 lakh pensioners will benefit from this decision. Central employees are currently getting 17% DA. By adding the last three installments, it will now become 28 percent. The Union Cabinet had last year banned the distribution of increased DA due to the Corona epidemic.

DA was increased by 4 per cent in January 2020, then by 3 per cent in June 2020 and by 4 per cent in January 2021. Their installments are pending. Now 11 per cent DA hike has been approved as part of these three pending instalments. Apart from DA, the ban on distribution of Dearness Relief (DR) to pensioners has also been removed.

DA means dearness allowance ‘महंगाई भत्ता’. For pensioners, this is called DR i.e. Dearness Relief or ‘Dearness Relief’. It is a component of salary. It is an ‘essential component’ in the case of central employees. And since it is available only after adding it to the salary, it is also taxable.

As the name suggests, this is directly related to the rising inflation of the country. This is the tool that the government gives to the central employees to fight inflation, the same is called DA or DR. It is usually increased twice in every financial year,  in January and in July.

How DA is added to the salary??

If 6% DA is increased in January 2021, then 6% salary will be increased in that month as compared to December 2020. You will get the same increased salary from every coming month.

And now if DA is increased again by 4% in July 2021, then in July 2021, 4% increased salary as compared to June 2021 and 10% (6% + 4%) increased salary as compared to December 2020. And then every coming month you will get the same increased salary.

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