A major announcement has brought cheer to central and state government employees and pensioners. The government has declared a 4% hike in Dearness Allowance (DA), which will be effective from January 1, 2025. This move comes in response to rising inflation and will take the total DA to 57%. Lakhs of employees and pensioners are set to benefit from this increase in income.
How is DA Hike Calculated?
The DA hike is based on the Consumer Price Index (CPI) released by the Central Statistics Office. With inflation increasing over recent months, a DA increase was expected. Normally, such announcements are made in March and September, but this time, it has been declared in April 2025.
How Much Will the Salary Increase?
If you earn a basic salary of ₹50,000, you will receive an extra ₹2,000 per month due to this 4% hike. Pensioners will also get a similar increase. This benefit applies to all employees covered under the Seventh Pay Commission. State government employees will receive the benefit as per their state’s decision.
Is the DA Amount Taxable?
Yes, the increased DA amount is fully taxable since it is a part of your salary. However, if the government introduces any tax relief or exemptions, it will reduce your tax burden. It’s a good idea to consult a tax expert for better planning.
When Will Arrears Be Paid?
Although the DA hike is effective from January 1, 2025, it will be paid from April 2025. Employees and pensioners will also receive arrears for January to March 2025 as a lump-sum payment.
Update on State Government DA Hike
Several states have responded positively to this announcement:
- Uttar Pradesh and Bihar have approved a 4% DA hike.
- Maharashtra and West Bengal are still considering the hike.
- Tamil Nadu has promised an additional 2% DA hike.
Final Advice
- Wait for the official notification from the government.
- Keep in touch with your salary or HR department for updated details.
- Speak with a tax advisor to plan your taxes wisely.
Conclusion
The 4% DA hike is a welcome move that will help employees and pensioners cope with inflation and enjoy a rise in monthly income. It is a financial relief that millions were waiting for.