7th Pay Commission: Reports Indicate That The Government Will Raise DA by 4% in March 2024

Good news for central government workers: according to media sources, the Center plans to increase dearness allowance (DA) by 4% for the six months beginning on January 1, 2024. According to the rumors, March 2024 is when the announcement may be made.

At 139.1%, the AICPI index is at this point. Due to increased costs, this may have resulted in central government workers receiving a higher dearness allowance.

The rumors state that if the government announces a 4 percent DA boost, the dearness allowance will increase to 50%.

The government increased the dearness allowance by 4% to 46% in the October DA rise, which will take effect on July 1, 2023.

Dearness Relief and Dearness Allowance: What Are They?

A sum deducted from an employee’s pay as a “dearness allowance” helps offset price increases in the market. Every time inflation rises, the value of a currency declines, thereby affecting workers’ de facto income by lowering their buying power.

Pensioners get a certain amount known as dearness assistance. Pensioners’ monthly pensions rise in tandem with rises in DR.

Whereas DR is expressed as a percentage of the pension amount, DA is expressed as a percentage of basic pay. Even though the federal government updates the allowances annually on January 1 and July 1, the announcement usually occurs in the months of March and September.

How 7th Pay Commission Determines DA Hike

The formula used to determine the DA and DR for central government workers and pensioners was updated by the central government in 2006. In accordance with the method for calculating DA, which is based on the percentage rise in the 12-month average of the All India Consumer Price Index (AICPI) for the month of June 2022, the government is currently increasing DA.

The base pay is used as the percentage to compute DA.

For workers in the central government:

Dearness Allowance as a percentage is equal to ((AICPI Average (Base Year 2001=100) for the previous 12 months) * (1155.76) * 100

The All India Consumer Price Index is known as AICPI.

For workers in the public sector (central government):

Dearness Allowance as a percentage = ((AICPI Average for the previous three months, -126.33)/126.33) * 100 (Base Year 2016 = 100).

How Many Workers Will Benefit From the 4% Increase in Pay?

About 48.67 lakh Central Government workers and 67.95 lakh pensioners would benefit from the DA boost. The aggregate annual effect of both DA and DR on the exchequer will be Rs 12,857 crore.

How Much Will Central Government Employees’ Salary Increase Be?

How much will central government workers likely get in pay increases now that the administration has proposed a 4 percent DA hike? If a person earns Rs 50,000 a month and receives Rs 15,000 in basic pay. At now, he or she receives Rs 6,300, or 42% of the base wage. Nevertheless, the employee would now get Rs 6,900 per month following the 4% increase, an increase of Rs 600 above the previous salary of Rs 6,300. Therefore, if an individual receives a monthly income of Rs 50,000 with a base pay of Rs 15,000, their payment will increase by Rs 600.

The dearness allowance and dearness relief have been raised by the government by 4% to 42% in the last DA rise in March 2023.

A number of state governments have recently raised the dearness allowance for their state government workers, including Madhya Pradesh, Odisha, Karnataka, Jharkhand, and Himachal Pradesh.

Taxability of DA

Since your dearness allowance, or DA, is a portion of your pay, the tax is applied according to your slab rate.