The central government recently announced a 3% increase in Dearness Allowance (DA) and Dearness Relief (DR) for central employees and pensioners. The hike, effective from July 1, 2025, raises the DA rate from 55% to 58%. This news was shared on October 1, bringing joy to over 1.2 crore employees and pensioners just before the festive season. This increase will help workers deal with inflation and rising living costs.
DA Increase for Level-1 Employees
The minimum basic salary for a Level-1 central government employee is Rs 18,000. With a 3% increase in DA, their monthly pay will rise by Rs 540.
Now, their total DA will be Rs 10,440 per month, which is 58% of their basic salary. This increase will make a visible difference in their monthly income, especially during festive times.
| Details | Before Hike (55%) | After Hike (58%) | Increase |
| Basic Pay | Rs 18,000 | Rs 18,000 | — |
| DA Amount | Rs 9,900 | Rs 10,440 | Rs 540 |
Increase in Pension for Retired Employees
Pensioners will also benefit from this DA increase. For those receiving a minimum basic pension of Rs 9,000, the 3% hike means they will now get Rs 270 more every month. Their total DR will now be Rs 5,220 per month. This small but steady increase will provide some relief to retired employees who depend on their pensions for daily expenses.
Arrears From July to September
The DA increase is applicable from July 1, 2025. This means employees and pensioners will receive arrears for July, August, and September along with their October payments. For Level-1 employees, this will add up to Rs 1,620 (Rs 540 × 3 months) in arrears. This extra amount will come as a nice bonus just before Diwali.
| Period | Monthly DA Increase | Months | Total Arrears |
| July–September 2025 | Rs 540 | 3 | Rs 1,620 |
Bonus for Central Government Employees
Along with the DA hike, the Finance Ministry also announced a festive bonus for central government employees. Group C and non-gazetted Group B employees will get an ad-hoc bonus equal to 30 days’ salary for the year 2024–25. The fixed bonus amount has been set at Rs 6,908.
However, not everyone will be eligible. Only those employees who were in service on March 31, 2025, and have worked continuously for at least six months will receive this bonus. Those who joined or left mid-year will get the bonus on a pro-rata basis depending on their service period.
Total Benefit for a Level-1 Employee
If we calculate the total benefit for a Level-1 employee in October, they will receive Rs 8,528 in total. This includes Rs 1,620 as arrears and Rs 6,908 as a festive bonus. Additionally, from October onwards, their salary will increase permanently by Rs 540 every month due to the DA hike. This will give employees extra money during the festive season and a steady rise in income going forward.
| Component | Amount (Rs) |
| DA Arrears (3 months) | 1,620 |
| Bonus | 6,908 |
| Total Benefit in October | 8,528 |
Final DA Hike Under 7th Pay Commission
This DA hike is the last increase under the 7th Pay Commission. Its term ends on December 31, 2025. The government has already announced the 8th Pay Commission in January 2025, but the terms and members of the new commission have not been finalized yet.
It is expected that the 8th Pay Commission will be implemented from January 1, 2026. However, its recommendations may take up to two years to be applied. Even so, whenever it is approved, it will be effective from January 2026, and employees will get arrears for that period.
Overall Impact of the DA Increase
The increase in DA and DR benefits all levels of employees and pensioners, from Level 1 to Level 18. This adjustment will improve the monthly income of government staff and retired persons. On top of that, the announced bonus gives additional financial relief to Group C and Group B non-gazetted employees.
Now, government workers are eagerly waiting for updates on the 8th Pay Commission, which is expected to bring new pay scales and allowances from 2026.
Conclusion
The 3% DA and DR hike has brought a wave of happiness for central government employees and pensioners. Along with arrears and a festive bonus, this increase provides real financial support during rising inflation. While this marks the end of the 7th Pay Commission, all eyes are now on the 8th Pay Commission for the next major salary revision in 2026. For now, employees can enjoy their festive season with this well-timed increase.
Disclaimer:This article is for general information only. The details provided are based on government notifications and public sources. Readers are advised to check official documents or consult concerned departments for confirmation before making any financial decisions.