7th Pay Commission latest update: BIG news for central govt employees regarding DA hike, DR benefits

In much-needed relief, Thakur had said that three pending DA installments to central government employees will be "subsumed in the cumulative revised rates of DA effective from July 1, 2021". He had had said the central government employees will get full DA benefits, with three pending installments being restored prospectively.

"As and when the decision to release the future installments of Dearness Allowance due from 01.07.2021 is taken, the rates of DA as effective from 01.01.2020, 01.07.2020 and 01.01. 2021 will be restored prospectively and will be subsumed in the cumulative revised rates effective from 01.07.2021," Thakur had told Rajya Sabha in a written reply.

It may be recalled that Prime Minister Narendra Modi-led government at the Centre had frozen the three installments of DA for central government employees and DR for pensioners, due on January 1, 2020, July 1, 2020 and January 1, 2021, due to the COVID-19 pandemic.

The Centre's decision to restore pending DA from July 2021 would be a piece of welcome news for about 50 lakh central government employees and over 65 lakh pensioners.

Meanwhile, the announcement also benefits central government pensioners as DA hike is directly proportional to Dearness Relief (DR). This means that if the central government employees DA goes up, pensioners' DR automatically increases too.

Earlier, the government had frozen DA and DR installments due to the ongoing Coronavirus pandemic. In the process, the government had saved over Rs 37,000 crore during the period.  

"The government saved Rs 37,430.08 crore through the move which helped it deal with the pandemic. The three instalments of Dearness Allowance and Dearness Relief to central government employees and pensioners due from 1.1.2020, 1.7.2020 and 1.1.2021 was frozen in view of the coronavirus pandemic," the Finance Ministry had said in the Rajya Sabha.

The restoration of DA benefits from July 1 means that the salary of central government employees would increase significantly. The hike in DA will directly affect the DA, HRA, Travel Allowance (TA), medical allowance of Central government employees.

The Centre's decision to restore DA will also increase the PF balance of Central government employees. It is to be noted that the PF contribution of central government employees is calculated on the basis of basic salary plus DA.