DA Hike Announced: How is dearness allowance calculated for central government employees?

How is DA Calculated: Centre announced a four per cent increase in Dearness Allowance and Dearness on Thursday. With this hike, central government employees and pensioners will get 50 per cent DA of their basic salary.

There was also a 25 per cent increase in transport allowance, deputation allowance, and canteen allowance.

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Apart from that, House Rent Allowance (HRA) has also been raised for different categories from 27 per cent to 30 per cent, from 19 per cent to 20 per cent, and from 9 per cent of the basic pay to 10 per cent. Tax exemption limit on gratuity has also been increased from Rs 20 lakh to Rs 25 lakh. 

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Amid the news that will give relief to crores of central government employees, here is how DA is calculated for central government employees.

How is DA calculated?

The DA is calculated as a percentage of an employee's basic salary. Depending on inflation, it is adjusted twice a year.

DA is calculated on the basis of the consumer price index (CPI) and industrial average.

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When we calculate DA on the basis of CPI, we first determine CPI.

CPI data is published by the Labour Ministry of the central government.  

DA calculation for Central government employees

Dearness Allowance % = ((Average of AICPI (Base Year - 2001=100) for the past 12 months -115.76)/115.76) *100

For central public sector employees

Dearness Allowance % = ((Average of AICPI (Base Year - 2001=100) for the past 3 months -126.33)/126.33) *100

Here, AICPI is All-India Consumer Price Index