PayCalcDearness Allowance (महंगाई भत्ता): The Complete Guide
DA is the inflation shield of every government salary and pension. Here is how the 60% rate is computed, the full history since 2016, and what happens when the 8th CPC merges it away.
How DA is calculated
DA is linked to the All-India Consumer Price Index for Industrial Workers (AICPI-IW), compiled monthly by the Labour Bureau, Shimla (labourbureau.gov.in). The formula for the 7th CPC period:
DA % = [(12-month avg. of AICPI-IW − 261.42) ÷ 261.42] × 100
261.42 is the linking value of the index on 1 January 2016 (converted to the 2016=100 base series), the date DA was reset to zero.
The rate is revised effective 1 January and 1 July each year. Because the Cabinet announcement usually comes two to three months later (around Holi and Diwali, as it happens), the intervening difference is paid as DA arrears.
DA history under the 7th CPC (2016 – 2026)
| Effective date | DA rate |
|---|---|
| Jan 2016 | 0% |
| Jul 2016 | 2% |
| Jan 2017 | 4% |
| Jul 2017 | 5% |
| Jan 2018 | 7% |
| Jul 2018 | 9% |
| Jan 2019 | 12% |
| Jul 2019 | 17% |
| Jan 2020 | 17% |
| Jul 2020 | 17% |
| Jan 2021 | 17% |
| Jul 2021 | 28% |
| Jan 2022 | 34% |
| Jul 2022 | 38% |
| Jan 2023 | 42% |
| Jul 2023 | 46% |
| Jan 2024 | 50% |
| Jul 2024 | 53% |
| Jan 2025 | 55% |
| Jul 2025 | 58% |
| Jan 2026 | 60% |
Note the three-instalment freeze at 17% during COVID-19 (January 2020 – June 2021) — the only break in the half-yearly rhythm since 2016. See the same data as a chart in the DA calculator.
DA at the pay commission changeover
At every commission changeover the accumulated DA merges into the new basic pay through the fitment factor, and DA restarts at 0%. In 2016, 125 percentage points were merged; in 2026, roughly 60 will be. This is also why HRA and other percentage-based allowances get rationalised at changeover — they would otherwise balloon on the enlarged basic. The mechanics are covered in the fitment factor guide.
DA for pensioners: Dearness Relief
Pensioners and family pensioners receive Dearness Relief (DR) at the same percentage on basic pension, notified separately by the Department of Pension & Pensioners' Welfare (doppw.gov.in). DR is paid on the full original pension even if part of it has been commuted.
Frequently asked questions
What is Dearness Allowance?
DA (महंगाई भत्ता) is inflation compensation paid as a percentage of basic pay to government employees, revised every January and July based on the AICPI-IW index. Pensioners receive the same rate as Dearness Relief (DR).
What is the DA formula?
DA % = [(12-month average of AICPI-IW (base 2016=100) − 261.42) ÷ 261.42] × 100. The Labour Bureau publishes the index monthly; the Department of Expenditure notifies the resulting rate.
Why was DA frozen in 2020-21?
The government froze three DA/DR instalments (January 2020, July 2020, January 2021) at 17% as a COVID-19 fiscal measure, resuming at 28% from July 2021. The frozen arrears were not paid.
What happens to DA under the 8th Pay Commission?
The accumulated DA (60% expected in January 2026) merges into the new basic pay via the fitment factor and the DA counter restarts from 0%.
Is DA different for bank or PSU employees?
Yes. Bank DA follows a different index slab system revised quarterly under bipartite settlements; PSU DA follows the IDA (Industrial DA) pattern. This guide covers Central Government CDA only.