Every six months, central government employees and pensioners wait for one number: the new rate of dearness allowance, or DA. The latest came on 28 October 2026, when the Union Cabinet approved a rise of 3 percentage points, from 60% to 63% of basic pay, with effect from 1 July 2026. Here is where that number comes from.


What DA is for


DA exists to stop prices eating into pay. The Seventh Central Pay Commission describes it as the money that protects "real pay": DA is "that percentage of pay by which the CPI (IW) increases over a fixed base value". When prices rise, the percentage rises, and so does the amount added to every employee's basic pay.


Pensioners get the same protection under a different name, dearness relief (DR). The Cabinet's decisions set both together, at the same rate: the October 2026 release raises DA for employees and DR for pensioners from 60% to 63%.


The index behind it


The prices DA follows are measured by the Consumer Price Index for Industrial Workers (CPI-IW), compiled every month by the Labour Bureau. When the Labour Ministry released the current version of the index in 2020, it said CPI-IW "is primarily used to regulate the dearness allowance of government employees".


CPI-IW tracks what industrial workers' families spend on food and drink, housing, health, education, transport and more. It is not built around government employees' own spending. The Sixth Pay Commission suggested a separate index for them; the Seventh noted that this "has, however, not been done", and recommended keeping the existing formula because it "has worked well over the years".


How the percentage is worked out


The method has three parts.


  • An average, not one month. DA is based on "the percentage increase in 12 monthly average of All India Consumer Price Index", in the words of the Cabinet's 2022 decision. For the July instalment, that is the 12 months ending June.
  • A fixed base. The percentage is measured against "a fixed base value", in the Pay Commission's words. When its pay matrix took effect in 2016, the DA built up until then was folded into the new basic pay: the fitment factor of 2.57 that set the new pay includes 2.25 "on account of DA neutralisation". So the count began again under the new scales.
  • One series, linked across a change. In 2020 the index moved to a new base year, 2016=100, from the old 2001=100. The Labour Bureau gave a linking factor of 2.88 to convert the new index to the old series.


Every rate so far has been a whole percentage. Once the Cabinet approves it, the Finance Ministry's Department of Expenditure issues the order departments pay from. For the July 2026 instalment that is Office Memorandum No. 1/2(i)/2026-E.II(B), dated 29 October 2026. It also spells out three details:


  • "Basic Pay" means the pay in the employee's level of the pay matrix. It does not include special pay or other kinds of pay.
  • DA stays "a distinct element of remuneration" and is not treated as pay under the service rules.
  • In the rupee amount, a fraction of 50 paise or more goes up to the next rupee, and less than 50 paise is dropped.


The armed forces and the Railways get their own orders, from the Defence and Railway ministries.


What it means in rupees


DA is a percentage of basic pay, so the same rise is worth more to someone on a higher level of the pay matrix. Take the lowest level, which the Seventh Pay Commission started at ₹18,000 a month:


  • At 60% DA: ₹10,800 a month.
  • At 63% DA: ₹11,340 a month.
  • The difference: ₹540 a month.


The new rate applies with effect from 1 July 2026 but was approved in late October, so it also covers the months already paid at 60%.


Some allowances move with DA too. The Seventh Pay Commission made several fixed allowances "partially DA-indexed": they rise by 25% each time DA rises by 50%. DA crossed 50% on 1 January 2024.


How DA has moved since 2019


These are the rates for employees on Seventh Pay Commission scales, from the Cabinet's decisions:


  • 17% from 1 July 2019, unchanged until July 2021
  • 31% from 1 July 2021
  • 34% from 1 January 2022, 38% from 1 July 2022
  • 42% from 1 January 2023, 46% from 1 July 2023
  • 50% from 1 January 2024, 53% from 1 July 2024
  • 55% from 1 January 2025, 58% from 1 July 2025
  • 60% from 1 January 2026, 63% from 1 July 2026


The July 2026 rise will cost ₹10,016.10 crore a year and reach about 48.54 lakh employees and 68.71 lakh pensioners, the Cabinet said.


What next


The next instalment is due with effect from 1 January 2027. In each of the last two rounds the Cabinet decided several months after that date: in April for the January 2026 instalment, and in October for July's. So the rate is usually known well after the date it applies from. Tark Samvad's DA tracker lists every revision with the order behind it.