New Delhi, August 3: Contrary to longstanding discussions and expectations, the Dearness Allowance (DA) for central government employees will not reset to zero upon reaching 50%. Initially scheduled to drop on July 1, 2024, it will instead continue to rise, based on current calculations and the absence of provisions in the 7th Pay Commission for automatic merging with basic pay.

Earlier practices saw DA and Dearness Relief (DR) automatically merged with basic salary once they reached 50%. However, a Business Line report confirmed months ago that the 7th Pay Commission made no such recommendations. The report clarified that future DA/DR installments would continue to accrue beyond 50%, moving to 52%, 53%, or 54%, without resetting to zero. 8th Pay Commission: How Much Salary Hike Can Central Government Employees Expect? Check Details Here.

Will the DA be Zero or Not?

Since January 2024, central government employees have received a 50% dearness allowance, which has not been reduced. Calculations suggest that the DA will keep increasing, a significant change from prior expectations. 8th Pay Commission Latest Update: When Will Central Government Announce Pay Panel’s Formation? Know Details Here.

The DA drop discussion stemmed from revisions in House Rent Allowance (HRA) under the 7th Pay Commission. While there was a provision to reassess HRA when DA hit 50%, no official statement from the government confirmed a DA reset. Consequently, DA calculations will continue without dropping to zero, and central employees' DA will rise at a rate of 50%.

Determining the DA for July 2024 relies on the AICPI-IW index figures from January to June 2024. Figures for January through May show the DA rising from 50.84% to 52.91%. Experts estimate a potential 3% increase, suggesting the DA could rise to 53%, with no possibility of a reset to zero.

How Much DA Can Be Raised?

The dearness allowance is calculated using the AICPI index, which reflects inflation data from various industries. This method ensures the allowance rises proportionally with inflation.

Central government employees can expect the DA announcement by September or October, with implementation from July 2024. Payments for the intervening months will be issued as arrears, based on AICPI data from January to June 2024 under the 7th Pay Commission.

(The above story first appeared on LatestLY on Aug 03, 2024 03:58 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).