Festive boost: Govt approves 3% Dearness Allowance hike, arrears to be paid in October

DA rate rises to 58 percent of basic pay; arrears for three months to be paid with October salary, benefiting 1.16 crore people

The Union Cabinet on Wednesday approved a 3 percent hike in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners, in a move that will put extra money in people’s pockets just before Dussehra and Diwali.

With this revision, DA has been increased from 55 percent to 58 percent of basic pay and pension. The hike takes effect retrospectively from July 1, 2025, ensuring that arrears for July, August, and September are credited along with the October salary, a timely festive bonus for millions.

#WATCH | Union Minister Ashwini Vaishnaw says, "The Union Government has approved an increase in Dearness Allowance and Dearness Relief by 3%, effective from July 1." pic.twitter.com/qvsO4a9IxR

— ANI (@ANI) October 1, 2025

What the hike means in numbers

For a government employee earning a basic pay of Rs 30,000, the hike translates into Rs 900 extra per month. Someone with a basic pay of Rs 40,000 will see an increase of Rs 1,200 monthly. Over three months, arrears will range between Rs 2,700 and Rs 3,600, providing additional spending power just ahead of the festive shopping season.

The decision is expected to benefit 48 lakh central government employees and 68 lakh pensioners, together accounting for 1.16 crore beneficiaries.

Why DA is revised twice a year

Dearness Allowance (for employees) and Dearness Relief (for pensioners) are revised twice a year, in January and July, to compensate for inflation. The adjustment is linked to the All India Consumer Price Index for Industrial Workers (CPI-IW), which reflects cost-of-living trends.

Though revisions are calculated in January and July, announcements are often delayed, with arrears bridging the gap.

The last hike under 7th Pay Commission

This 3 percent increase is expected to be the final revision under the 7th Pay Commission, with the 8th Pay Commission likely to be implemented from January 2026. The move marks a transition point in India’s salary structure for government employees, setting the stage for a broader overhaul of pay and pension rules next year.