The Union Cabinet has approved a 3-percentage-point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. Announced on October 28, 2026, the revision raises the DA and DR rates from 60% to 63% of basic pay and basic pension, respectively.

The increase will take effect retrospectively from July 1, 2026. This means eligible employees and pensioners will be entitled to the revised rates from that date, with arrears payable according to the applicable payment arrangements.

According to the Ministry of Finance, the decision is expected to benefit approximately 48.54 lakh central government employees and 68.71 lakh pensioners. The annual financial impact on the government exchequer is estimated at ₹10,016.10 crore.

How Much Extra Money Will Employees Receive?

The additional amount depends on an employee's basic pay, not their total salary or take-home income. Since the DA rate has increased by three percentage points, the additional monthly allowance can be calculated by multiplying basic pay by 3%.

For example:

• Basic pay of ₹18,000: Additional DA of ₹540 per month.

• Basic pay of ₹25,000: Additional DA of ₹750 per month.

• Basic pay of ₹40,000: Additional DA of ₹1,200 per month.

• Basic pay of ₹50,000: Additional DA of ₹1,500 per month.

These figures represent the additional DA before any applicable deductions. The actual increase in take-home salary may differ depending on the employee's salary structure and deductions.

What Does the DA Hike Mean for Pensioners?

Pensioners covered by the decision will receive a corresponding increase in Dearness Relief. The additional amount is calculated using the same three-percentage-point increase applied to the eligible basic pension.

For instance, a pensioner with a basic pension of ₹30,000 would receive an additional ₹900 per month in Dearness Relief, before any applicable adjustments.

The revised rate applies to eligible central government pensioners under the relevant rules. State government employees and pensioners are covered by their respective state decisions, so they should not assume that the central government's announcement automatically applies to them.

Why Does the Government Increase DA and DR?

Dearness Allowance is intended to help serving employees manage rising living costs, while Dearness Relief serves a similar purpose for pensioners.

The rates are revised periodically using an established formula based on the recommendations of the Seventh Central Pay Commission. These revisions are designed to help offset the impact of inflation on the purchasing power of salaries and pensions.

When Will the Revised Amount Be Credited?

The revised rates are effective from July 1, 2026, but the exact date of payment and the release of arrears depend on the applicable government orders and payroll or pension-processing arrangements.

Employees should check their salary slips and official departmental circulars for the revised DA rate and arrears details. Pensioners can consult their pension-disbursing bank or the relevant pension authority for information about their revised Dearness Relief and any arrears.

The key point is that the approved hike increases DA and DR from 60% to 63% of eligible basic pay and pension. The actual additional amount will vary according to each person's basic pay or pension.

The announcement was issued by the Press Information Bureau under the Ministry of Finance on October 28, 2026.