Dearness Allowance (DA) is to be increased by 3% before Diwali, for over 1.2 crore central government employees and pensioners, if the government carries it through. The DA stands at 55%; hence an increase will make it 58% of basic pay/pension with the effect from July 2025, while payment for arrears will be included along with October’s salary for July through September.
Reasoning For DA Increase
The inflation index used for calculation is CPI-IW (Consumer Price Index for Industrial Workers). Average CPI-IW for the period of July 2024 to June 2025 has been worked out at 143.6 justifying the increase. Under the 7th CPC formula for DA, this inflation index basically translates into a DA rate of almost 58%.
Expected Timing & Implementation
It is expected to be announced close to Diwali, this being 20-21 October in 2025, just in time for celebrations. The adjustment is said to be retrospective from 1st July 2025, through which the arrears for three months (July-September) will go along with the July salary.
What The Increase Really Means
For an employee with a basic salary of ₹18,000, the given increase means that the DA would also increase from ₹9,900 at 55% to ₹10,440 at 58%, that is, an extra ₹540 per month. And for pensioners, say if one has a pension of ₹20,000; their DA or DR will increase similarly, thereby increasing their monthly income.
7th Pay Commission: The Final Hike
This DA revision truly carries importance because it is possibly going to be the last hiking opportunity under the 7th Pay Commission, which ends on December 31, 2025. The 8th Pay Commission has been announced, but its full schedule and implementation timeline, that is the terms of reference and members, have yet to be finalized. Most estimates place its onset sometime in late 2027-early 2028.
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