Government employees have been eagerly waiting for Dearness Allowance (DA) hike news. The good news is announcement for an increase in DA is likely in August as AICPI data till June has not come yet. The figures will be released by the end of July 2019.
The government employees are hopeful that their DA will be raised, due to the rise in the inflation rate.
What is Dearness Allowance?
DA is basically a component of salary which is paid to the employees. It is directly concerned with the employee's cost of living and linked to the Consumer Price Index (CPI).
It is well known that, the Central Government revises DA from time to time. However, it is calculated in terms of percentage after taking the Basic Pay as the base amount. Talking about the present time, employees and pensioners get 12 per cent DA. As per experts, DA is fully taxable or the amount you get in the name of dearness allowance is taxable.
How Central Government Employees DA is calculated?
DA is linked to the All India Consumer Price Index (AICPI). AICPI average is taken in the formula for DA calculation.
Check the formula to calculate DA:
DA% = [{AICPI's average (base year 2001 = 100) for past 12 months - 115.76}/115.76] x 100
Adding to it, DA is decided on the basis of the city. It varies, depending on the employee's office location. DA will be more for the urban area, whereas for semi semi-urban areas and villages will be less.
What is the difference between DA and HRA?
Same as DA, House Rent Allowance (HRA) is also a crucial component of the employee's salary. The employer gives it to help fulfilling the housing needs of employees. HRA is provided to both, employees of public sector and private sectors. Calculation of DA is based on the specific percentage of Basic Salary that is then added to HRA in Basic.
