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DA Hike July 2026: Will dearness allowance increase from 60% to 64%? Know how much salary will increase and whether DA will be merged with basic pay!
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DA Hike July 2026 Calculation & Merger: Indication of 4% increase in Dearness Allowance (DA) for July 2026 for central government employees and pensioners. Know the truth about salary increase and merger with basic pay when DA is 60% to 64%.
Just before the festive season, big news is coming out regarding Dearness Allowance (DA) and Dearness Relief (DR) for more than 1 crore central government employees and pensioners. Based on the data of All India Consumer Price Index of Industrial Workers (AICPI-IW) released by the Labor Bureau of the Ministry of Labor and Employment, there is a strong possibility that the dearness allowance, which will be effective from July 2026, may increase by 3 to 4 percent. At present, central employees are getting DA at the rate of 60 percent from January 2026. If the government led by Prime Minister Narendra Modi approves the increase of 4 percent in the upcoming cabinet meeting, then the total dearness allowance will increase to a record. 64 percent But will reach. With this possible increase, the debate has also intensified in the employee unions and administrative corridors whether the DA which has crossed the 60 percent mark will be merged into the basic pay.
Dearness Allowance of central employees is calculated on the basis of 12 months average consumer price index (AICPI-IW) based on the fixed formula prescribed by the 7th Pay Commission.
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Index surge: In the latest monthly data released by the Labor Bureau, the index rose by 1.3 points to 153.2, taking the 12-month average score to reflect a theoretical DA rate of 64.38%.
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Rule of Decimal: Since under the rules, decimal value is discarded in the calculation of DA and only whole percentage is accepted, hence this rate is estimated to be 64 percent.
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Previous Trend: The DA of employees reached 50% in January 2024, followed by 53% in July 2024, 55% in January 2025, 58% in July 2025 and 60% in January 2026. Now the level of 63% or 64% for July 2026 is considered almost certain.
In view of the upcoming big festivals like Dussehra, Diwali and Chhath Puja, the Confederation of Central Government Employees and Workers has written a letter to the Department of Expenditure of the Finance Ministry, demanding immediate action.
General Secretary of the organization M.S. The letter signed by Venkatesan clarifies that he is not demanding any advance or additional benefit, but rather the formal process should be completed without any administrative delay. Since this amendment is to be effective from July 1, 2026, if the Cabinet approves in October, employees and pensioners will get 3 months of arrears for the months of July, August and September in lump sum along with salary.
Dearness allowance is calculated directly on the basic pay of the employee. If DA increases from 60% to 64%, the likely increase in monthly salary at various pay matrix levels will be as follows:
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Pay Level-1 (Minimum Basic Salary ₹18,000):
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Current DA at 60%: ₹10,800 per month
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New DA at 64%: ₹11,520 per month
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Direct increase in monthly salary: ₹720 (Annual profit of ₹ 8,640)
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Pay Level-7 (Middle Level Basic Salary ₹44,900):
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Current DA at 60%: ₹26,940 per month
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New DA at 64%: ₹28,736 per month
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Direct increase in monthly salary: ₹1,796 (Annual profit of ₹ 21,552)
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Pay Level-10 (Gazetted Officer Basic Salary ₹56,100):
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Current DA at 60%: ₹33,660 per month
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New DA at 64%: ₹35,904 per month
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Direct increase in monthly salary: ₹2,244 (Annual profit of ₹ 26,928)
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In the same proportion, a similar increase will be recorded in the Dearness Relief (DR) of more than 65 lakh pensioners of the Central Government, which will lead to a direct increase in their monthly pension.
The question most discussed in government circles is whether after DA crosses the 50% or 60% mark, it will be merged with the basic pay?
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Historical rule of 5th Pay Commission: During the 5th Central Pay Commission (5th CPC) it was recommended that whenever dearness allowance reached 50 per cent, 50% of DA should be directly merged into basic pay, which was called ‘Dearness Pay’.
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Current arrangement of 7th Pay Commission: The 7th Pay Commission had abolished the rule of automatic merger in the basic pay of DA. Instead, the Commission had made a provision that when DA crosses 50%, then the auxiliary items like House Rent Allowance (HRA), Child Education Allowance (CEA), Hostel Subsidy and the maximum limit of gratuity will automatically increase by 25%.
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Government’s clear stand: The Finance Ministry has already clarified that there is no statutory provision for merger of 50% or 60% DA with basic pay in the 7th Pay Commission framework. Therefore, even if DA is 64%, it will still be available as additional allowance.
Employee organizations believe that merger of DA with basic pay is now only possible. 8th Central Pay Commission This will be possible only under the recommendations of.
Usually new pay commission recommendations are implemented every 10 years. The 10-year tenure of the 7th Pay Commission is moving towards completion. When the 8th Pay Commission submits its final report and formulates the new pay matrix, the then total dearness allowance (be it 60%, 64% or more) will be reduced to zero (0%) and subsumed into the new basic pay with a new ‘Fitment Factor’.
At present, the official nod on the DA hike for July 2026 is awaited in the upcoming meeting of the Union Cabinet, which will ensure an inflow of additional cash into the pockets of lakhs of employees during the festive season.