How Dearness Allowance is worked out, and its arrears
How DA is calculated on basic pay, the current rate for central government staff, how a rise and its arrears are worked out, how HRA and transport allowance fit in, and how DA is taxed.
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In short
- DA = basic pay × DA rate ÷ 100. On a basic of ₹56,100 at 63 percent, DA is ₹35,343 a month.
- The central rate rose from 60 to 63 percent with effect from 1 July 2026, approved by the Cabinet on 28 October 2026.
- DA is revised twice a year, from 1 January and 1 July, and is often announced months later, so arrears follow.
- On a basic of ₹56,100, a 3 point rise adds ₹1,683 a month, and four months of arrears come to ₹6,732.
- DA and its arrears are taxable salary. State rates differ from the central rate, so check your own order.
Dearness Allowance is the part of a government salary that is meant to keep up with prices. For central government staff it now amounts to well over half of basic pay, so each change affects take-home pay noticeably. Rises are usually announced some months after they take effect, which means an arrears payment as well. Pensioners receive the same percentage as Dearness Relief. This page shows how the amount is worked out, how arrears are counted, and how DA connects with HRA, transport allowance and tax.
The calculation
DA is a percentage of basic pay:
DA = basic pay × DA rate ÷ 100
Basic pay here is the pay in your pay matrix level, and does not include other allowances. For a basic of ₹56,100 at 63 percent:
56,100 × 63 ÷ 100 = ₹35,343 a month
At the previous rate of 60 percent, it was ₹33,660, so the rise is ₹1,683 a month.
| Basic pay | DA at 60% | DA at 63% | Rise per month |
|---|---|---|---|
| ₹18,000 | ₹10,800 | ₹11,340 | ₹540 |
| ₹35,400 | ₹21,240 | ₹22,302 | ₹1,062 |
| ₹56,100 | ₹33,660 | ₹35,343 | ₹1,683 |
| ₹78,800 | ₹47,280 | ₹49,644 | ₹2,364 |
| ₹1,23,100 | ₹73,860 | ₹77,553 | ₹3,693 |
How the rate is set
The Dearness Allowance rate is linked to inflation. For central staff, it is based on the All-India Consumer Price Index for Industrial Workers, published by the Labour Bureau. The usual formula under the 7th Pay Commission uses the average of the index over the preceding twelve months, measured against a base figure.
The rate changes twice a year, from 1 January and from 1 July. The Cabinet usually approves the January change around March and the July change around September or October, so there is a gap each time. The most recent change raised the rate from 60 to 63 percent from 1 July 2026, and was approved on 28 October 2026.
The calculator's default rate is that central figure. If your employer has its own rate, as most state governments and public sector units do, enter that number.
State governments set their own rates and timing, and these may lag behind the central rate. Bank employees and many PSU staff follow different systems, some revised quarterly, so a central figure does not apply to them.
Working out arrears
When a rise takes effect from an earlier date, the difference for the months already paid becomes due. The sum is:
arrears = basic pay × (new rate − old rate) ÷ 100 × months
With a basic of ₹56,100, a rise of 3 points and arrears for July to October, which is four months:
56,100 × 3 ÷ 100 × 4 = ₹6,732
The number of months depends on when the higher rate first appears in your salary. If it starts with the November salary, then July, August, September and October are in arrears. Departments decide the exact timing, so check your pay slip.
If your basic pay changed during the arrears period, such as from an annual increment on 1 July, each month's figure has to be worked out on the correct basic. The arrears calculator handles larger cases, where both basic and DA changed.
Under the usual orders, the fraction of a rupee in a DA payment is rounded to the next higher rupee when it is 50 paise or more. Small differences from your pay slip may come from that, or from a different date of increment.
How DA fits into gross pay
DA is one part of a government salary. The calculator shows gross pay by adding basic, DA, HRA and transport allowance.
House Rent Allowance. HRA depends on the city class, under the 7th Pay Commission system. It is a percentage of basic pay, and the rates step up as DA crosses set levels. At DA of 50 percent and above, the rates are 30 percent for X cities, 20 percent for Y cities and 10 percent for Z cities. That is the rate used here.
Transport allowance. Central TA is a fixed amount by pay level and city, and DA is paid on top of it. Because this varies by level, the calculator lets you enter your TA, including the DA on it, as one amount.
For example, take a basic of ₹35,400 in a Y city. DA at 63 percent is ₹22,302, HRA at 20 percent is ₹7,080, and with a TA figure of ₹0, gross pay is ₹64,782. Add your actual TA to get your own figure. Deductions such as NPS, CGHS and income tax then bring this down to your take-home amount.
DA and retirement benefits
DA feeds into other payments as well.
NPS. The employee and government NPS contributions are calculated on basic plus DA, so a rise in DA also raises the monthly contribution.
Gratuity. The gratuity formula counts basic pay plus DA, as the gratuity calculator shows.
Pension. A pensioner receives Dearness Relief at the same percentage, on basic pension. The pension calculator shows how.
Merger. It has sometimes been said that DA merges with basic at 50 percent, as it did under an earlier commission's recommendations. That has not happened in the present system. The rate has continued beyond 50 percent, and any merger would come through a pay commission or a separate order. The 8th Pay Commission calculator shows how DA is treated when a new pay matrix is set.
Tax on DA
DA is fully taxable as salary. It is taxed in the year it is paid or falls due, whichever is earlier, under the normal salary rules. When DA forms part of the salary for HRA exemption or for retirement benefits, the employer's terms matter, so check with your office.
Arrears are taxed in the year you receive them, which may push you into a higher tax slab. There is a specific relief for this. Section 89 of the old Income-tax Act, carried into the Income-tax Act, 2025, spreads the arrears back to the years they belong to, and you claim it by filing the relevant form on the income tax portal before your return. The arrears calculator guide gives more detail, and the income tax calculator shows the slabs.
Common questions from staff
Why has my rise not reached my account? The order must be issued, and then your office updates the pay system. Different departments take different amounts of time.
Is DA paid on HRA? No. The HRA is a percentage of basic pay alone.
Do all staff get the same rupee rise? No. It is the same percentage, so higher pay levels get a larger rupee amount.
Does DA rise in a fixed step? No. It follows the price index, and a rise of 2 to 4 points is typical, but it is not guaranteed. It could be small, or in a year of low inflation very small.
What this calculator assumes
- DA is a percentage of basic pay alone.
- Arrears use one basic pay for all the months you enter.
- HRA is 30, 20 or 10 percent of basic pay, as paid when DA is at or above 50 percent.
- Transport allowance is entered as a single monthly amount, and DA is not added to it here.
- Figures are before deductions and tax. Your pay slip and your department's order are the final word.