Diwali Gift: Karnataka Declares 3.75% Hike In DA, Lecturers Get 4% Hike; How To Calculate Dearness Allowance

Ahead of Diwali festivaly, the Karnatak government has announced a 3.75% hike in dearness allowances on the salaries of government employees. While the lecturers of UGC/AICTE/ICAR scale and the judicial officers will be receiving a much higher hike in DA to the tune of 4%. The move also comes after central government declared 4% hike in DA for the employees.

As per the notification, the state government revised its earness allowance to 38.75% from the existing 35%, a hike of 3.75%. Further, a 4% hike is announced for the mentioned lecturers.

The Karnatak Government which led by the Congress Party announced that they will spend an additional Rs 1,109 crore for the hikes in DA.

Recently, the PM Modi-backed government announced 4% hike for 1.2 crore central government employees and pensioners. They also hiked dearness relief for these employees. That being said, the DA and DR has increased to 46% from earlier 42%.

Here's How To Calculate Dearness Allowance on salaries:

In general terms, the government pays dearness allowance to its employees and pensioners to offset the impact of stubbornly high inflation. However, it needs to be noted that the impact of inflation varies depending on the location of an employee. Hence, the calculation of dearness allowance is different among employees based on their pay matrix and presence in the urban, semi-urban or rural sector. Also, DA is fully taxable for salaried employees.

Dearness Allowance Formula: For central government employees, the formula for calculating DA as a percentage is --- [(Average of AICPI (Base Year 2001 = 100) for the last 12 months - 115.76)/115.76] x 100

In the case of public sector employees, the DA formula is -- [(Average of AICPI (Base Year 2001 = 100) for the last 3 months - 126.33)/126.33] x 100 DA is revised twice a year on a periodical basis.

Example:

Let's suppose, the basic salary is Rs 18,000 per month under the Level 1 (1800 GP) pay matrix. Then DA of an employee would be Rs 8,280 per month at 46% (46 X Rs 18,000/100) --- compared to the DA of Rs 7,560 at a 42% rate. This would be a rise of Rs 720 in dearness allowance.

Taking the similar example, Karnataka government employees will witness DA hike of Rs 675 on their basic salary. Here's how, the DA on Rs 18,000 per month would come around Rs 6,975 at 38.75%, (38.75 X 18,000/100), compared to the DA of Rs 6,300 at 35% (35 X 18,000/100).

DA is revised twice a year on a periodical basis. Also, it needs to be noted that dearness allowance is fully taxable for salaried employees. The Income Tax Department has made it mandatory to declare tax liability for DA in the income tax returns filing.