DA now at 63%: Will the latest hike increase your HRA too, or only your monthly salary?

The Union Cabinet has increased the dearness allowance (DA) and dearness relief (DR) by 3 percentage points each, benefiting 48.54 lakh central government employees and 68.71 lakh pensioners across the country.

The latest revision is expected to take the DA rate from 60% to 63% of basic pay, translating into extra allowance for central government employees every month. However, those with higher basic pay will receive a larger amount.

For example, an employee with a basic pay of ₹18,000 will receive an additional ₹540 per month, while someone with a basic pay of ₹50,000 will get ₹1,500 more per month following the latest DA rate revision.

Will the 3% DA hike increase your HRA too?

An employee’s HRA wouldn’t change just because the DA has been revised in this cycle. It is important to understand that DA and HRA and two different components of your salary break-up and serve different purposes.

While HRA as a salary component is designed to assist employees with their housing expenses, DA helps to offset the impact of inflation and rising living costs on central government employees.

Under the 7th CPC structure, both DA and HRA are calculated as a percentage of basic pay. However, while DA is revised twice a year based on inflation, HRA rates depend on the classification of the employee’s city of posting.

There is however a link between the two components as HRA rates are revised when DA crosses specified thresholds. Under the 7th CPC, HRA rates were increased to 27%, 18% and 9% for X, Y and Z category cities, respectively, when DA crossed 25%. These rates were subsequently raised to 30%, 20% and 10% when DA crossed 50% in January 2024.

Since the DA rate has already crossed the 50% threshold, the latest 3% hike from 60% to 63% is not likely to trigger another HRA revision.

Another key difference is that while DA and DR are only available to public sector employees, HRA is also available to certain private sector employees. Further, HRA can be fully or partially exempt from income tax, while DA and DR are fully taxable as per an individual’s income tax slab rate.

Will employees receive arrears after DA hike?

The effective date of the revised DA rate is July 1, 2026; thus, government employees will also be getting arrears from July 2026.

For an employee with a basic pay of ₹18,000, the additional DA would amount to ₹540 per month. If the hike is effective from July 2026, the total additional DA for four months, from July to October, would be ₹2,160.

The government revises DA rate twice a year, with changes effective from January 1 and July 1. While the January revision is announced in either March or April, the July revision is often announced in October month of the year.