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DA hiked by 4%: Check how to calculate new salary, pension

The Union Cabinet has approved a 4 per cent increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for central government pensioners.

This hike raises the DA and DR to 46 per cent, benefiting 48.67 lakh central government employees and 67.95 lakh pensioners, said Union Minister Anurag Thakur. He added that the move will cost the central government Rs 12,857 crore annually.

This 4 per cent increase will be effective from July 1, 2023.

In a notification, the Union Cabinet said it approved the additional DA and DR installment, citing the need to counter rising prices.

The notification said the 4 per cent increase aligns with the formula based on the recommendations of the 7th Central Pay Commission and raises the existing rate of 42 per cent of the Basic Pay/Pension.

It may be noted that the government revises DA/DR twice in a year, with the first one applicable from January and the second from July.

Impact on salary after DA hike

The calculation of DA for central government employees relies on the latest Consumer Price Index for Industrial Workers (CPI-IW). With the fresh 4 per cent increase, the DA has gone up to 46 per cent.

The take-home salaries of central government employees will increase as a result. Pensioners and family pensioners will also see an increase due to increased DR.

For instance, central government employees with a basic salary of Rs 18,000, a 42 per cent Dearness Allowance (DA) translated to an extra monthly income of Rs 7,560.

With 46 per cent DA, their monthly salary will increase to Rs 8,280. Therefore, the annual benefit of this DA hike for these employees translates to Rs 8,640.

Meanwhile, individuals with a basic salary of Rs 56,900, who currently enjoy the advantages of a 42 per cent DA, presently receive Rs 23,898 as part of their monthly earnings.

After the fresh 4 per cent DA hike, this amount will go up to Rs 26,174. This increase translates to an annual salary benefit of Rs 27,312.

To calculate DA, use this formula: (Basic Salary * DA percentage)/100.

Impact of DR increase on pensions

For central government pensioners, the Dearness Relief (DR) functions similarly to DA for employees.

This 4 per cent increase in DR leads to an increase in the monthly pension of retired central government employees.

For instance, if a central government pensioner receives a basic pension of Rs 20,000 per month, with a 42 per cent DR, they used to receive Rs 8,400. With the new 46 per cent DR, their pension will rise to Rs 9,200 per month, resulting in an increase of Rs 800.

These adjustments apply retrospectively from July 1, 2023. Central government employees and pensioners can anticipate higher salaries from October, along with arrears dating back to July 2023.

To calculate DR, use this formula: (Basic Salary * DR percentage)/100.

Published On:

Oct 19, 2023

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Image Credit / Source: News Wire