Here’s some good news for central government employees. While many are eagerly waiting for the 8th Pay Commission, there’s another Dearness Allowance (DA) hike expected soon under the 7th Pay Commission.
The government may increase DA by 3% to 4% in July 2025, which could raise the total DA to 58% or 59%.
DA is Revised Twice a Year
The government revises DA two times a year – once in January and once in July.
The January DA hike is usually announced around February or March, but is considered effective from January 1.
The July DA hike is generally announced by September or October, but is considered effective from July 1.
No matter when the government makes the announcement, employees receive arrears from the effective date. DA increases are meant to protect employees from rising inflation.
How is DA Calculated?
DA is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which is released monthly by the Ministry of Labour.
According to the 7th Pay Commission, the DA percentage is calculated using this formula:
DA (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100
Here, 261.42 is the base CPI-IW from the year 2016.
Inflation Also Affects DA
Although the full average CPI-IW up to May 2025 is not available yet, the CPI-AL and CPI-RL (used for agricultural and rural workers) show a slight decline:
CPI-AL: 2.84%
CPI-RL: 2.97%
These are not directly used for calculating DA but help understand inflation trends.
How Much Will DA Increase?
If the CPI-IW stays stable or rises slightly in June, then the government is likely to increase DA by 3% to 4%. That would push total DA to 58% or 59%.
The final decision will be made once June’s CPI-IW data is released (expected by end of July), followed by cabinet approval in September or October. After that, the revised DA will be added to the salary with arrears from July 1, 2025.
How Much Will the Salary Increase?
If DA increases by 3%, then an employee with a basic salary of ₹18,000 will get an extra ₹540 in monthly salary.
At 55% DA: ₹9,990 is paid as DA.
After a 3% hike to 58%: DA will become ₹10,440.
This will offer financial relief to lakhs of employees and pensioners, especially at a time when everyone is looking forward to the 8th Pay Commission.
