3% DA Hike for Central Government Employees and Pensioners, Four-Month Arrears Included
The central government has approved a 3% increase in the Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. With this hike, DA has risen from 55% to 58% and will be effective from July 1, 2025. Employees will receive arrears for July, August, and September along with their October salary.
This decision, announced just before the festive season, is expected to benefit millions of employees and pensioners across India. The Cabinet approved the DA and DR increase in its meeting held on October 29, 2025.
Who Will Benefit and From When?
The government has clarified that the 3% hike will take effect from July 1, 2025. This means employees will receive arrears for the months of July, August, and September. The arrears will be added to the October salary, providing a festive boost just before Diwali and Dussehra.
Approximately 48 lakh central government employees and 68 lakh pensioners will benefit from this decision — around 1.16 crore people in total. This additional amount will not only offer financial relief but also enhance spending capacity during the festive season.
Salary Calculation: How Much Will Employees Get?
The DA hike will directly increase employees’ take-home pay. For instance, employees with a basic salary of ₹30,000 will receive an additional ₹900 per month, while those earning ₹40,000 will get ₹1,200 more per month.
With three months of arrears included, employees can expect an extra payment between ₹2,700 and ₹3,600. This will serve as a significant financial cushion for families during the festive period.
What Is Dearness Allowance (DA)?
Dearness Allowance is a percentage of the employee’s basic salary provided to offset the impact of inflation. Pensioners receive this benefit as Dearness Relief (DR). DA and DR are revised twice a year — in January and July.
The calculation is based on the All-India Consumer Price Index (CPI-IW) for industrial workers, which measures changes in the cost of living. According to experts, this might be the final DA revision under the 7th Pay Commission, as the 8th Pay Commission is expected to take effect from January 2026.
Importance of DA in Salary Structure
In a government employee’s salary structure, the basic pay is combined with Dearness Allowance (DA), House Rent Allowance (HRA), and Transport Allowance. On average:
- Basic Pay: 51.5%
- Dearness Allowance: 30.9%
- House Rent Allowance: 15.4%
- Transport Allowance: 2.2%
This shows that DA forms a major part of an employee’s income. Every increase in DA directly impacts their overall financial well-being and purchasing power.
Conclusion: The 3% hike in DA and DR is a welcome move for millions of employees and pensioners. It not only boosts income ahead of major festivals but also provides relief from rising inflation, while setting the stage for the transition to the 8th Pay Commission in 2026.