Dearness Allowance hiked to 50%: Top things central government employees should know about DA hike, change in HRA | India Business News

7th Pay Commission Dearness Allowance hike: The latest increase by the government has raised central government employees‘ Dearness Allowance (DA) to 50%. This means they will receive a 4% raise in their DA. Similarly, pensioners will also see their dearness relief (DR) rise by 4% to 50% to help offset the increase in prices.
A statement from the Press Information Bureau (PIB) released on March 7, 2024, mentions that the combined impact on the government’s finances due to these increases will amount to Rs 12,868.72 crore annually.This will benefit approximately 49.18 lakh central government employees and 67.95 lakh pensioners.
According to ET, here are six key points central government employees should know about this latest increase:

Basic Pay increase

Starting from January 1, 2024, the Dearness Allowance rates for Central Government workers will rise from 46% to 50% of Basic Pay.
Basic Pay
In the updated pay structure, Basic Pay refers to the salary earned at the specified Level in the Pay Matrix, following the recommendations of the 7th Central Pay Commission (CPC) accepted by the Government. However, it does not encompass additional types of pay such as special pay, as outlined in the office memorandum.
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Separate element

The Dearness Allowance will remain a separate component of compensation and will not be considered as part of the pay governed by FR 9(21).
Rounding of payments
Payments related to Dearness Allowance that include fractions of 50 paise or more will be rounded up to the next whole rupee, while fractions of less than 50 paise will be disregarded.
Arrears payment
Arrears of Dearness Allowance will not be disbursed before the salary disbursement date of March, 2024.

Applicability to other employees

These directives will also be applicable to civilian employees paid from the Defence Services Estimates, and the associated expenses will be accounted for under the relevant category within the Defence Services Estimates. However, separate orders will be issued by the Ministry of Defence for Armed Forces personnel and by the Ministry of Railways for Railway employees.

Impact on salary

Consider a central government employee with a monthly basic salary of Rs 45,700. Previously, at a Dearness Allowance (DA) rate of 46%, their DA amounted to Rs 21,022. With the recent increase in DA to 50%, their DA will now be Rs 22,850. This results in an increase of Rs 1,828 in their DA.
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Salary components affected by DA hike

As the Dearness Allowance (DA) reaches 50%, central government employees can expect a boost in various components of their salary, including House Rent Allowance (HRA), daily allowance, and other allowances. This increase, in line with the recommendations of the 7th Pay Commission, will result in a notable salary enhancement for central government employees.
When the Dearness Allowance (DA) reaches 50%, several allowances for central government employees will increase. These include:
a) House Rent Allowance
b) Children’s Education Allowance
c) Special Allowance for Childcare
d) Hostel Subsidy
e) TA on Transfer (Transportation of Personal Effects)
f) Gratuity Ceiling
g) Dress Allowance
h) Mileage Allowance for Own Transport
i) Daily Allowance

Increase in dearness relief (DR) for pensioners

Let’s consider a central government pensioner with a monthly basic pension of Rs 36,100. Previously, at a Dearness Relief (DR) rate of 46%, the pensioner received Rs 16,606. With the DR increased to 50%, the pensioner will now receive Rs 18,050 monthly as dearness relief. Consequently, their pension will rise by Rs 1,444 per month.