7th Pay Commission: Central govt employees to get Dearness Allowance at revised rate of 31%, check pay band calculation after 3% DA hike

The increase of 3 percent dearness allowance (DA) and dearness relief (DR) hike is over the existing rate of 28 percent of the basic pay/pension would cost the exchequer Rs 9,488.70 crore per annum.

New Delhi: 7th Pay Commission latest update --In what could be called as a bumper festive bonanza for lakhs of Central government employees, the Union Cabinet last week approved a 3 percent dearness allowance (DA) and dearness relief (DR) hike, which will benefit over 47.14 lakh Central government employees and 68.62 lakh pensioners. 

"The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today has approved to release an additional instalment of Dearness Allowance  to Central Government employees and Dearness Relief (DR) to pensioners w.e.f. 1.7.2021 representing an increase of 3% over the existing rate of 28% of the Basic Pay / Pension, to compensate for price rise. This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.  The combined impact on the exchequer on account of both Dearness Allowance and Dearness Relief would be Rs.9,488.70 crore per annum.  This will benefit about 47.14 lakh Central Government employees and 68.62 lakh pensioners," said an official release.

It may be recalled that the Cabinet Committee chaired by Prime Minister Shri Narendra Modi had in July approved increase the Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from 01.07.2021 to 28% representing an increase of 11% over the existing rate of 17% of the Basic Pay/Pension.

Check out the following assumptive calculation. Let's assume the salary to be Rs 20,000 per month

Basic Pay = Rs 20,000/month

DA as per revised rate of 31% of Rs 20,000 = Rs 6,200

DA as per revised rate of 21% of Rs 20,000 = Rs 5,600

Difference in payment after latest DA hike i.e, revised rate of 31% (Rs 6,200-Rs 5,600) = Rs 600 more per month 

Yearly Difference in payment after latest DA hike i.e, revised rate of 31% = Rs 7,200

In view of the unprecedented situation which arose due to the COVID-19 pandemic, three additional instalments of Dearness Allowance (DA) to Central Government employees and Dearness Relief (DR) to pensioners, which were due from 01.01.2020, 01.07.2020 and 01.01.2021, had been frozen.

The Government has decided to increase the Dearness Allowance to Central Government employees and Dearness Relief to pensioners with effect from 01.07.2021 to 28% representing an increase of 11% over the existing rate of 17% of the Basic Pay/Pension.  The increase reflects the additional instalments arising on 01.01.2020, 01.07.2020 and 01.01.2021.  The rate of Dearness Allowance/Dearness Relief for the period 01.01.2020 to 30.06.2021 shall remain at 17%.