7th Pay Commission: Good news for Central govt employees as DA, TA, HRA, 6 other allowances hiked

The month of March has been exceptionally good for central government employees as the Central Cabinet has approved a 4 percent increase in dearness allowance (DA Hike). With the hike in dearness allowance, it has now increased by 50 percent. HRA has also been revised. Apart from dearness allowance (DA) and HRA, there are seven other allowances that the central government has also been increased.

Which allowances have been increased?

Central government employees have witnessed a significant increase in 9 allowances including dearness allowance (DA).

    House Rent Allowance (HRA)
    Children's Education Allowance (CAA)
    Childcare Special Allowance
    Hostel Subsidy
    TA on Transfer (Transportation of Personal Effects)
    Gratuity
    Dress Allowance
    Mileage Allowance for own transport
    Daily Allowance

How will the calculation of dearness allowance change?

In 2016, when the 7th Pay Commission was implemented, the dearness allowance (DA) was set to zero. As per the rules, once the dearness allowance reaches up to 50 percent, it will be set to zero, and the amount of money that employees receive as an allowance will be added to the basic salary, i.e., Dearness Allowance Merger Basic Salary. Suppose an employee's basic salary is Rs 18,000, then he will receive Rs 9,000 as 50 percent DA. However, once the DA reaches 50 percent, it will be added to the basic salary again, making the dearness allowance zero. This means the basic salary will be revised to Rs 27,000. However, the government may have to make changes in the fitment for this.

When will the dearness allowance be set to zero?

According to experts, the new dearness allowance will be calculated in July. Because the government increases the dearness allowance twice a year. Approval has been given for January to March. Now the next revision will be effective from July 2024. In this case, the dearness allowance will be merged only when the AICPI index for January to June 2024 determines whether the dearness allowance will be 3 percent, 4 percent, or more. Once this situation is clear, 50 percent of dearness allowance will be added to the employees' basic salary.