Dearness Allowance Raised 3% to 63% From 1 July 2026
The Union Cabinet cleared an extra 3 per cent Dearness Allowance and Dearness Relief instalment from 1 July 2026, taking the rate to 63 per cent of basic pay.

Why in News
On 28 October 2026 the Union Cabinet approved a 3 per cent rise in Dearness Allowance and Dearness Relief with effect from 1 July 2026, lifting the rate from 60 to 63 per cent of basic pay or pension.
The Union Cabinet, chaired by Prime Minister Narendra Modi, cleared an additional instalment of Dearness Allowance (DA) for central government employees and of Dearness Relief (DR) for pensioners on 28 October 2026. The instalment adds three percentage points to the rates in force, which stood at 60 per cent of basic pay or pension, so the figure now reads 63 per cent. The revised rate applies with effect from 1 July 2026, which means the months already gone by will be settled as arrears.
Why the allowance is paid
DA and DR exist to shield pay and pensions from rising prices. When the cost of living climbs, a fixed salary buys less, so the government tops it up by a percentage of basic pay rather than rewriting the pay scales themselves. Serving staff receive the top-up as Dearness Allowance; retired staff receive the same relief under the name Dearness Relief.
What the decision costs and whom it reaches
Paying the two together at the higher rate will draw an extra 10,016.10 crore rupees from the exchequer every year. The order covers roughly 48.54 lakh serving employees of the Union government and 68.71 lakh pensioners, which makes it one of the widest-reaching money decisions the Cabinet takes in any year.
| Item | Figure |
| Earlier rate | 60 per cent of basic pay or pension |
| Increase approved | 3 per cent |
| Rate after revision | 63 per cent |
| Effective from | 1 July 2026 |
| Yearly cost to the exchequer | 10,016.10 crore rupees |
| Employees covered | 48.54 lakh |
| Pensioners covered | 68.71 lakh |
The formula behind the number
The size of the rise is not settled by discretion. It flows from the accepted formula built on the recommendations of the 7th Central Pay Commission, which ties the allowance to movements in the consumer price index for industrial workers. Because the formula does the arithmetic, the Cabinet decision is in practice a ratification of what the index has already recorded, and the same percentage is extended to pensioners so that the two groups are not treated differently.
Why aspirants should note it
Questions on this decision usually turn on three things: the percentage of the rise, the date it takes effect, and the Pay Commission whose formula governs it. The cost to the exchequer and the number of beneficiaries are the next most likely asks, since both are stated in the Cabinet communication itself.
Important Facts
| Decision | Additional instalment of Dearness Allowance and Dearness Relief |
|---|---|
| Approved by | Union Cabinet chaired by Prime Minister Narendra Modi |
| Quantum | 3 per cent over the existing rate |
| Rate before and after | 60 per cent to 63 per cent of basic pay or pension |
| Effective from | 1 July 2026 |
| Annual cost | 10,016.10 crore rupees |
| Employees benefited | About 48.54 lakh |
| Pensioners benefited | About 68.71 lakh |
| Formula based on | Recommendations of the 7th Central Pay Commission |
Exam Point of View
Remember the quantum (3 per cent), the old and new rates (60 to 63 per cent), the effective date (1 July 2026), the annual cost (10,016.10 crore rupees), the beneficiaries (48.54 lakh employees and 68.71 lakh pensioners) and the formula source, the 7th Central Pay Commission.
Practice Questions
By how many percentage points did the Union Cabinet raise Dearness Allowance in its decision of 28 October 2026?
- A.2 per cent
- B.3 per cent
- C.4 per cent
- D.5 per cent
Show answer
The Cabinet cleared an additional instalment of Dearness Allowance for serving employees and Dearness Relief for pensioners representing a rise of three percentage points over the rates already being paid.
Read the full explanation →From which date does the revised Dearness Allowance rate apply?
- A.1 January 2026
- B.1 April 2026
- C.1 July 2026
- D.1 October 2026
Show answer
The Cabinet approved the release of the additional instalment with effect from that date, which is why the employees and pensioners covered by the order also become entitled to arrears for the months that have already passed between the effective date and the date of the decision.
Read the full explanation →What is the combined annual burden on the exchequer from the Dearness Allowance and Dearness Relief revision?
- A.7,540.20 crore rupees
- B.10,016.10 crore rupees
- C.12,480.75 crore rupees
- D.15,220.50 crore rupees
Show answer
This is the figure the Cabinet put on the combined effect of the higher Dearness Allowance for employees and the higher Dearness Relief for pensioners, counted for a full year.
Read the full explanation →The formula used to work out the Dearness Allowance increase rests on the recommendations of which body?
- A.The 6th Central Pay Commission
- B.The 7th Central Pay Commission
- C.The Sixteenth Finance Commission
- D.The Reserve Bank of India
Show answer
The Cabinet described the increase as being in accordance with the accepted formula, which is based on that commission's recommendations, so the percentage is arrived at mechanically rather than by negotiation.
Read the full explanation →Frequently Asked Questions
How much Dearness Allowance will central government employees now draw?
63 per cent of basic pay. The Cabinet added 3 per cent to the earlier rate of 60 per cent, with effect from 1 July 2026.
What is the cost of the Dearness Allowance and Dearness Relief hike?
The two together will cost the exchequer 10,016.10 crore rupees a year, covering about 48.54 lakh employees and 68.71 lakh pensioners.
Which Pay Commission's formula decides the Dearness Allowance?
The accepted formula based on the recommendations of the 7th Central Pay Commission, which links the allowance to the price index.
Sources
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2329484 (opens in a new tab) — Press Information Bureau
- https://www.pib.gov.in/PressReleasePage.aspx?PRID=2329485 (opens in a new tab) — Press Information Bureau
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