DA Hike Calculation On 7th CPC Level 1-10 Employees, Pensioners; Will 63% DA Impact Salary, Pensions In 8CPC?

The government has hiked the dearness allowance by 3% to 63% for central government employees and pensioners for the quarter of July-December 2026. This comes as good news for them ahead of the Diwali festival. Dearness allowance and dearness relief are two components of basic pay and pensions under 7th Pay Commission. Here's how it will impact employees and retirees and whether the 63% dearness allowance will be carried forward to 8th Pay Commission as well.

DA Hike 2026:

In major good news, the Union Cabinet led by Prime Minister Narendra Modi approved the release of an additional instalment of dearness allowance (DA) to central government employees and dearness relief (DR) to pensioners with effect from July 1, 2026. This will translate to a 3% hike in DA and DR to 63% from the earlier 60%.

The combined impact on the exchequer on account of the increase in both Dearness Allowance and Dearness Relief would be Rs 10,016.10 crore per annum. This will benefit about 48.54 lakh Central Government employees and 68.71 lakh pensioners.

This increase is in accordance with the accepted formula, which is based on the recommendations of the 7th Central Pay Commission.

DA Hike To 63% Calculation For Level 1-10 Grade Employees Under 7th Pay Commission

At 63% hike, the dearness allowance for level 1 grade employees under the 7th Pay Commission will rise by Rs 540 to Rs 11,340 on their basic pay from the earlier Rs 10,800 DA at 60%.

For level 2 employees, the DA will rise by Rs 597 to Rs 12,537 from the earlier Rs 11,940. Meanwhile, level 5 grade employees DA will be hiked by Rs 876 to Rs 18,396 from the earlier Rs 17,520. Meanwhile, the DA for level 10 employees will surge by Rs 1,683 to Rs 35,343 from the earlier Rs 33,660.

The basic pay for level 1-10 employees ranges from Rs 18,000 per month and Rs 56,100 per month.

Pay Level	Minimum Basic Pay	DA at 60%	DA at 63%	Monthly DA Increase
Level 1	₹18,000	₹10,800	₹11,340	₹540
Level 2	₹19,900	₹11,940	₹12,537	₹597
Level 3	₹21,700	₹13,020	₹13,671	₹651
Level 4	₹25,500	₹15,300	₹16,065	₹765
Level 5	₹29,200	₹17,520	₹18,396	₹876
Level 6	₹35,400	₹21,240	₹22,302	₹1,062
Level 7	₹44,900	₹26,940	₹28,287	₹1,347
Level 8	₹47,600	₹28,560	₹29,988	₹1,428
Level 9	₹53,100	₹31,860	₹33,453	₹1,593
Level 10	₹56,100	₹33,660	₹35,343	₹1,683

Formula for DA on central government employees: DA amount = Basic Pay × DA rate (%) ÷ 100.

Notably, the DA percentage is calculated using the 12-month average of the All-India Consumer Price Index for Industrial Workers (AICPI-IW):

Example: If basic pay is Rs 18,000 and DA is 63% = Rs 18,000 x 63/100 = Rs 11,340.

If basic pay is Rs 30,000 and DA is 63% = Rs 30,000 x 63/100 = Rs 18,900.

DR Hike Calculation For Pensioners Under 7th Pay Commission

Formula: DR amount = Basic Pension × DR rate (%) ÷ 100

Example: If basic pension is Rs 20,000 and DR is 63%: Rs 20,000 x 63/100 = Rs 12,600.

Accordingly, for level 1 pensioners, DR will rise by Rs 270 to Rs 5,670 at 63% DR from the earlier Rs 5,400. For level 5 pensioners, the DR will increase by Rs 438 to Rs 9,198 from the earlier Rs 8,760. For level 10 pensioners, DR will surge by Rs 842 to Rs 17,672 from the earlier Rs 16,830.

The minimum pension for 7th CPC pensioners range from Rs 9,000 to Rs 28,050 per month.

Corresponding Pay Level	Assumed Basic Pension	DR at 60%	DR at 63%	Monthly DR Increase
Level 1	₹9,000	₹5,400	₹5,670	₹270
Level 2	₹9,950	₹5,970	₹6,269	₹299
Level 3	₹10,850	₹6,510	₹6,836	₹326
Level 4	₹12,750	₹7,650	₹8,033	₹383
Level 5	₹14,600	₹8,760	₹9,198	₹438
Level 6	₹17,700	₹10,620	₹11,151	₹531
Level 7	₹22,450	₹13,470	₹14,144	₹674
Level 8	₹23,800	₹14,280	₹14,994	₹714
Level 9	₹26,550	₹15,930	₹16,727	₹797
Level 10	₹28,050	₹16,830	₹17,672	₹842

8th Pay Commission: Will 63% Dearness Allowance Impact Employees, Pensioners In 8CPC?

First and foremost, the new DA of 63% is only applicable under the 7th Pay Commission.

Central government pay under the 8th Pay Commission will build on a revised pay matrix, merging current basic pay with a higher fitment factor, resetting Dearness Allowance (DA) to zero initially, and updating allowances calibrated to inflation and living costs, as per the Kotak 811 explainer.

Hence, the chances of 63% DA becoming zero in the 8th Pay Commission is on the card. However, several employee unions and representatives are demanding to merge dearness allowances for an increase in the employees' salary base, allowances and retirement benefits. The unions demand that the government absorb the dearness allowance of 7th Pay Commission to the basis salary, which will increase the minimum pay eventually.

As of now, there is no official approval or plan to merge the dearness allowance. Last year in December, the Finance Ministry had said that there are no proposals for merging existing DA with basic pay under consideration.

So accordingly, the recommendations in 8th CPC is yet to be finalised.