Central Government Announces Hike in Dearness Allowance for Employees
The Indian government has announced a 4% increase in dearness allowance (DA) for central government employees, effective from January 1, 2024. This hike will increase the DA from 46% to 50% of the basic pay. The decision will benefit around 49 lakh central government employees and 67.95 lakh pensioners.
The hike in DA is expected to provide much-needed relief to central government employees who have been facing rising prices. The DA is a component of an employee's salary that is adjusted periodically to reflect changes in the cost of living.
The government has said that the hike in DA will cost the exchequer around ₹12,868.72 crore per year.
This is the latest in a series of measures taken by the government to improve the financial condition of its employees. In recent years, the government has also increased the minimum wage and introduced a new scheme to provide housing benefits to its employees.
What is Dearness Allowance (DA)?
Dearness allowance (DA) is a component of an employee's salary that is adjusted periodically to reflect changes in the cost of living. It is a way to help employees maintain their purchasing power in the face of inflation.
The DA is usually calculated as a percentage of the basic salary of an employee. The percentage is determined by the government based on the prevailing inflation rate.
Who is eligible for DA?
Dearness allowance is usually paid to government employees, public sector undertakings, and some private sector organizations.
How is DA calculated?
The DA is calculated as a percentage of the basic salary of an employee. The percentage is determined by the government based on the Consumer Price Index (CPI). The CPI is a measure of inflation that tracks the changes in the prices of essential goods and services.
How often is DA revised?
The DA is usually revised periodically, typically every six months or a year. The revision is based on the latest CPI data.
Impact of DA hike on employees
The hike in DA will have a positive impact on the disposable income of central government employees. This will help them to meet their rising living expenses.
The hike in DA is also likely to boost the demand for consumer goods and services, which will have a positive impact on the overall economy.
Is DA taxable?
Yes, DA is taxable income. It is added to the basic salary of an employee to calculate the gross salary. The gross salary is then used to calculate the income tax liability of the employee.
