7th Pay Commission Dearness Allowance, DR Calculation: How pension and salary will increase

7th Pay Commission Dearness Allowance/DR Calculation: The Union Government last week announced a hike in rates of dearness allowance (DA) for Central Government Employees and dearness relief (DR) for pensioners by 4% of the basic pay/pension. With the latest hike, the DA/DR rate for Central Government employees and pensioners will increase to 42% of the basic pay/pension.

The DA/DR rate hike is decided by the Government as per the formula recommended by the 7th Pay Commission. DA and DR are provided to employees and pensioners respectively in order to compensate them for the price rise. With the recent hike, nearly 47.58 lakh Central Government employees and 69.76 lakh pensioners will benefit.

DA Hike Calculation

The 4% hike in DA means that the rate of dearness allowance provided to Central Government employees will now be 42% of the basic salary. So for example, if an employee’s basic salary is Rs 31400, he was earlier getting Rs 11,932 as DA at the applicable rate of 38%. With DA jumping to 42%, this employee will now be getting Rs 13,188 as DA. Thus, the DA component of his salary would effectively increase by 10.5% from Rs 11,932 to Rs 13,188. In absolute numbers, this employee’s DA component would increase by Rs 1256 (Rs 13,188-Rs 11,932).

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DR Hike Calculation

The 4% hike in DR means that the rate of dearness relief provided to Central Government pensioners will now be 42% of the basic pension. So for example, if a Central Government pensioner’s basic pension is Rs 25,200 he was earlier getting Rs 9576 as DR at the applicable rate of 38%. With DR jumping to 42%, this pensioner will now be getting Rs 10,584 as DR. Thus, the DR component of his pension would effectively increase by 10.5% from Rs 9576 to Rs 10,584. In absolute numbers, this pensioner’s DR component would increase by Rs 1008 (Rs 10,584-Rs 9576).

DA Hike Implementation Date

The DA/DR hike will come into effect from January 1, 2023. As such, the additional instalment with effect from 1st January will represent an increase of 4% over the existing rate of 38% of the basic pay/pension.