The Centre has increased Dearness Allowance (DA) for Central Government employees by three percentage points, raising the rate from 60% to 63% of basic pay with effect from July 1, 2026. The revision will result in arrears for the intervening months, with the enhanced allowance applicable retrospectively from the beginning of July.
The Ministry of Finance issued an Office Memorandum on October 29, formalising the revision following the President’s approval. The order, issued by the Department of Expenditure, directs all ministries and departments to implement the revised rates for eligible Central Government employees.
Under the revised arrangement, DA will be calculated at 63% of basic pay under the pay structure based on the recommendations of the Seventh Central Pay Commission (7th CPC), as accepted by the government. Basic pay refers to the amount drawn at the prescribed level in the Pay Matrix and excludes other forms of remuneration, including special pay.
The three-percentage-point increase will be effective from July 1, making employees eligible for the revised allowance for the period preceding the issuance of the order. The memorandum confirms the effective date but does not specify an exact schedule for disbursement of the arrears.
The government has clarified that Dearness Allowance will remain a separate component of employee remuneration and will not be treated as pay under Fundamental Rule 9(21). This provision maintains its distinct status within the existing service and remuneration framework.
The memorandum also specifies how authorities must calculate fractional amounts arising from DA payments. Amounts involving 50 paise or more will be rounded up to the next rupee, while fractions below 50 paise will be disregarded.
The revised rates will also cover civilian employees whose salaries come from the Defence Services Estimates, with the expenditure charged to the corresponding budgetary head. However, the Ministry of Defence and the Ministry of Railways will issue separate instructions governing DA payments for Armed Forces personnel and railway employees, respectively.
For personnel serving in the Indian Audit and Accounts Department, the government issued the order in consultation with the Comptroller and Auditor General of India, in accordance with Article 148(5) of the Constitution.
Director Abhimanyu Sahoo signed the memorandum, which has been circulated to all Central Government ministries and departments.
