The Ministry of Finance has increased the Dearness Allowance (DA) for Central Government employees from 58% to 60% of Basic Pay, effective January 1, 2026. As per the Office Memorandum issued by the Department of Expenditure on April 22, 2026, “Basic Pay” refers to the pay drawn in the prescribed level of the Pay Matrix under the 7th Central Pay Commission (CPC) and does not include any special pay or allowances.

The 2 percentage point hike is part of the government’s routine biannual revision aimed at offsetting inflation and protecting the real income of employees. The revised DA will be paid with arrears from January 2026, benefiting lakhs of Central Government employees and pensioners.

The memorandum clarifies that DA will continue to remain a separate component of remuneration and will not be treated as part of pay under the ambit of Fundamental Rules. This distinction is important for calculating various allowances and retirement benefits.

In terms of calculation, any DA amount involving fractions will be rounded off — fractions of 50 paise and above will be rounded up to the next rupee, while amounts below 50 paise will be ignored.

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DA and remuneration 

The order also clarifies that Dearness Allowance will continue to remain a distinct component of remuneration and will not be treated as pay under the provisions of Fundamental Rules. Additionally, the payment of DA involving fractions will be rounded off — amounts of 50 paise and above will be rounded up to the next rupee, while fractions below 50 paise will be ignored.

The revised DA rates will apply not only to civilian Central Government employees but also to those paid from Defence Services Estimates. However, separate orders are expected to be issued by the Ministry of Defence and the Ministry of Railways for Armed Forces personnel and railway employees, respectively.

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Further, the memorandum notes that the revision has been issued in consultation with the Comptroller and Auditor General (CAG) of India, as required under constitutional provisions for employees of the Indian Audit and Accounts Department.

The hike is expected to provide a modest boost to disposable incomes for lakhs of Central Government employees and pensioners, while also increasing the government’s salary and pension expenditure.

Published on: Apr 22, 2026 7:01 PM IST