The Cabinet has given its approval for the disbursement of another instalment of Dearness Allowance to Central Government employees and Dearness Relief to Pensioners, which is set to be due from the 1st of January 2023.
The Cabinet has given the green light to release an extra Dearness Allowance installment to Central Government employees and Dearness Relief to Pensioners, due from Jan 1st, 2023. This additional installment will result in a 4% rise from the current rate of 38% of the Basic Pay/Pension to counteract inflation. The annual impact on the exchequer from both Dearness Allowance and Dearness Relief will be approximately Rs.12,815.60 crore. This change will benefit around 47.58 lakh Central Government employees and 69.76 lakh pensioners, in accordance with the 7th Central Pay Commission’s recommendations.
4% Additional Dearness Allowance from 1.1.2023
The Consumer Price Index (IW-BY 2016=100) from July-December 2022 showed a 4% rise in Dearness Allowance, pushing the total to 42%.
How to calculate 42% DA on Basic Salary?
If the starting basic salary of a Central Government employee is Rs. 49000, then the calculation for Dearness Allowance (DA) will be as follows:
|Month/Year||DA 38%||DA 42%||DA Arrears|
|January 2023||Rs. 1862|
|February 2023||Rs. 1862|
|March 2023||Rs. 2058||Rs. 392|
DA Arrears 2023 for CG employees
Usually, Dearness Allowance hikes are declared in March and September, taking effect from the following January and July, respectively. Accordingly, Dearness Allowance for the first two months of each period will be provided as arrears. On 1 January 2023, a further 4% increase in the Dearness Allowance rate will be applicable to all Central Government employees, pensioners, and those receiving family pensions. Existing CG employees will be provided with a 42% Dearness Allowance by March 2023, and arrears for the months of January and February 2023 will be paid out then as well. The Dearness Allowance or Dearness Relief will be calculated using the existing and retired employees’ respective basic pay or basic pension.
7th CPC DA Chart 2023
The Dearness Allowance is a major element of income for state employees and pensioners in India. The chart below shows how the allowance rate has risen from 0% to 42% between 2016 and 2023.
|DA Effective From||DA Rate 2016 to 2023|
|January 2021||17% (28%)|
|July 2020||17% (24%)|
|January 2020||17% (21%)|