Dearness Allowance Hiked to 58% for Central Government Employees

The Ministry of Finance has recently announced a hike in the Dearness Allowance (DA) provided to the Central Government employees. As per the office memorandum dated October 6, 2025, issued by the Ministry of Finance (Department of Expenditure), the rate of dearness allowance is being revised from 55% to 58% of the Basic Pay, with effect from July 1, 2025.

The Dearness Allowance is a component of salary that is mainly for government employees. It works as a cost-of-living adjustment to offset inflation and increasing living costs. It is calculated as a percentage of an employee’s basic pay, and is revised twice a year, based on changes in the Consumer Price Index (CPI).

The Basic Pay is the pay drawn in the Level of Pay Matrix as per the 7th Central Pay Commission (CPC), and does not include special pay or other allowances. As per the memorandum, it will continue to be a separate element of the remuneration and will not be treated as the pay within the ambit of FR 9(21).

The hike is applicable to all Central Government employees, including civilian employees paid from Defence Services Estimates, and the expenditure will be chargeable to the relevant head of Defence Services Estimates. For Railway employees and Armed Forces personnel, separate notifications will be issued by the Ministry of Railways and the Ministry of Defence, respectively.

The memorandum further informed that employees working in the Indian Audit and Accounts Department will also be covered, in consultation with the Comptroller and Auditor General of India. Further, any DA amount involving fractions of 50 paise or more will be rounded off to the next rupee, and anything less than 50 paise will be ignored.