Dearness Allowance (DA): Meaning, Check When and How Dearness Allowances is Calculated?

Dearness Allowance DA 2024: The Dearness Allowance (DA) is a significant part of the salary structure for government employees in India. With Diwali just around the corner, the Central Government has announced the 3% DA hike in the salary of all central government employees. The candidates preparing for the government should check the latest announcement made by the government regarding salary hikes

 The Centre increases the Dearness Allowance (DA) twice a year, with changes taking effect in January and July. The announcements are normally made in September and March. Every year, around the time of Holi in March, the January DA hike is announced, and around Diwali in October or November, the July hike is revealed.

DA 2024 Latest News 

As per the latest announcement, the Union Cabinet, led by Prime Minister Shri Narendra Modi, has approved an additional payment of Dearness Relief (DR) to pensioners and Dearness Allowance (DA) to Central Government employees, effective July 1, 2024. This represents a three percent (3%) increase over the current rate of 50% of Basic Pay/Pension, which is intended to offset inflation. This raise is in line with the established methodology, which is based on the Seventh Central Pay Commission's recommendations.  The cumulative annual impact of both DA and DR on the government would be Rs. 9,448.35 crore. This will benefit about 49.18 lakh central government employees and 64.89 lakh pensioners.

How is DA Calculated?

DA is calculated based on the All India Consumer Price Index (AICPI), which is responsible for tracking retail prices. The DA on salary varies as per the posting of the employee, whether the candidate is posted in an urban, semi-urban, or rural area. The DA is calculated based on the formula listed below

For Central Government Employees

DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] x 100 

For Public Sector Employees

DA% = [(Average of AICPI (Base Year 2001 = 100) for the last 3 months – 126.33)/126.33] x 100

What is the Difference Between DA and HRA?

The Dearness Allowance and the HRA are two different components that have different income tax treatment, so it is important to keep them apart. A notable difference is that although DA is exclusively available to public sector workers, HRA is applicable to both private and public sector employees. Moreover, several tax exemptions that apply to HRA are unavailable for DA beneficiaries.

Also Check,