The cabinet has approved the proposal to increase the dearness allowance for central government employees and pensioners by 3 percent to 34 percent of the basic pay from 31 percent previously, effective January 1, 2022.
This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.
The combined expenditure to the state exchequer will be ₹9,544.50 crores per annum. According to the government, the new dearness allowance hike will benefit 47.68 lakh central government employees and 68.62 lakh pensioners.
Before that in July, the government had restored the dearness allowance and dearness relief and increased the rate of allowance from 17 percent to 28 percent. In October 2021, the DA and DR again saw a jump of 3 percent.
Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. Indian citizens may receive a basic salary or pension that is then supplemented by housing or a dearness allowance, or both. The guidelines that govern the Dearness Allowance vary according to where one lives. Dearness Allowance is a fully taxable allowance.