7th Pay Commission: Central Government Announces 3% DA Hike for Employees and Pensioners
The central government has approved a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) for central government employees and pensioners. With this decision, the DA has gone up from 55% to 58% of the basic pay and pension, effective July 1, 2025.
The move comes ahead of the festive season, benefitting nearly 48 lakh employees and 68 lakh pensioners across the country.
When Will the New Salary Be Paid?
Although the hike is effective from July, the arrears for July, August, and September 2025 will be released along with the October salary, just before Diwali. This timing provides employees and pensioners with additional financial support during the festival season.
Impact on Salary and Pension
- For employees with a minimum basic pay of ₹18,000:
The 3% DA hike will add ₹540 per month, raising the total salary to ₹28,440. - For pensioners with a minimum pension of ₹9,000:
The increase will add ₹270 per month, taking the total pension to ₹14,220 at the new 58% DA rate.
Additionally, employees will receive arrears for three months (July–September), which could amount to an extra ₹2,700–₹3,600, similar to a festive bonus.
How is DA Calculated?
Dearness Allowance is linked to the Consumer Price Index for Industrial Workers (CPI-IW), which is published every month by the Labour Bureau under the Ministry of Labour. The DA revision reflects inflation trends and ensures that salaries and pensions keep pace with rising living costs.
What About the 8th Pay Commission?
In January 2025, the government confirmed the formation of the 8th Pay Commission. While the official notification regarding the Commission’s members and Terms of Reference is awaited, the recommendations are expected to come into effect from January 1, 2026. At that stage, DA (currently 58%) will reset to zero and be merged with the revised basic pay.
✅ Key Takeaway: The latest 3% DA hike offers timely financial relief to central government employees and pensioners ahead of major festivals, while the upcoming 8th Pay Commission is set to bring larger structural changes from 2026.
