In essence, the Dearness Allowance is one sort of allowance imparted to Central Government employees. After merging with salary and pension, the allowances will now be calculated at zero. This merging can also have implications on the salary component. So let us have a glimpse into the situation after the merging of dearness allowance and relief into basic salary and basic pension. Presently, employees avail 53 percent of basic salary and pension as dearness allowance. The dearness allowance is updated twice in a year, which is effective from January 1, and July 1. The announcement is mostly made in March and October.
What Is The Update On 8th Pay Commission
The 8th Pay Commission has been approved for central government employees. The central government employees, as well as pensioners, will be eligible for benefit of the new pay commission from 1st January 2026. As for one side the pension of employees and pensioners may go sky-high, on the other side some allowances may get cut back.
Would There Be A Bumper Increase In Pensions?
The minimum basic pension of retired employees is currently Rs 9,000, and the maximum pension is Rs 125,000 per month. It is also said that the fitment factor in the 8th pay commission shall be 2.86. If the fitment 2.86 factor is applied, the minimum pension will shoot up from Rs 9,000 to Rs 25,740 per month. That is, a bumper increase of 186 percent in pension. At the same time, the maximum pension would also go on record at Rs 357,500. There can also be a bumper increase in the salaries of employees.
Dearness Allowance Of Employees Will Cease Fo Exist
Basic salary and pension are 53% dearness allowance and dearness relief. For increase in dearness allowance, it is revised twice a year on the basis of All India Consumer Price Index (AICPI). Upon implementation of the 8th Pay Commission, revisions regarding salary and pension will come into effect. Every time a new pay commission is implemented, dearness allowance is made zero. The old dearness allowance is added to the minimum basic salary and basic pension. Dearness allowances will turn to zero after the application of the new pay commission.
This Is How The DA Is Calculated.
The 8th Pay Commission recommendations could be announced from January 1, 2026. There is potential for an upward revision of the Dearness Allowance two more times. The first will take place right now in January 2025, and after this, the second will happen in July 2025. Assuming that every time 3 percent dearness allowance is granted, it will sum up to 59 percent.
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