what is DEARNESS ALLOWANCE calculation

present dearness allowance and dearness relief calculation

Dearness allowance meaning in English allowance given for compensating the expenditure involved in purchase of items dear or required for day to day living.

First of all According to Wikipedia Dearness Allowance definition(DA) is cost of living adjustment allowance .

Furthermore, Dearness allowance of central government employee and dearness allowance of state government employee is based on dearness allowance order issued by Finance Ministry or Finance department as the case may be. Also, Public Sector Employees as well as Pensioners in India, Bangladesh get da. Dearness allowance on pension is termed as dearness relief.

Variations of dearness allowance calculation

Dearness allowance for bank employees, dearness allowance in BSNL and dearness allowance da in private companies ,dearness allowance psu, dearness allowance railway employees, is as per dearness allowance slab or dearness allowance percentage as per their dearness allowance rules. However in respect of dearness allowance of central government employees the dearness allowance rate is the same all over India . Dearness allowance chart is prepared according to Dearness allowance revision declared. Recently in Dearness allowance news 5% dearness allowance hike was declared to all central government employees and this is called dearness allowance to all central government employees July 2019. Dearness allowance arrears is paid in the month of October 2019.

Exactly, Consumer Price index is base for da calculation. This is also called dearness allowance cpi.

Moreover, from Dearness allowance history it is noted that Second World War DA means Dearness Food Allowance.

Thus,this concept was first of all introduced by Textile Industry in India.

Generally Dearness allowance hike is result of inflation. You can check the dearness allowance history and compare the inflationary trends.

It is based on location and pay commission also , probably it varies. Dearness allowance Gujarat, Dearness allowance Maharashtra, Dearness allowance Kerala government, Dearness allowance in Mumbai, dearness allowance Uttar Pradesh, dearness allowance Uttarakhand, dearness allowance Delhi, dearness allowance tamil nadu etc varies as per their government’s dearness allowance order. It will also vary with dearness allowance table 6th pay commission, dearness allowance rule in 7th pay commission as per the pay commissions existing in those states.

You can also read pay commission

calculation of da?

Now, calculated as % of basic pay in respect of Employees. Likewise % of basic pension in respect of Pensioners.

Thus,calculation based on AICPI

For Central Government Employees

DA% =( Average of AICPI ( Base year 2001=100) for the past 12 months – 115.76/115.76)*100

Also,For Central PSU

Thus,DA% =( Average of AICPI (Base year of 2001 =100) for the past 3 months-126.33/126.33)*100

what is CPI ?

Now, Economic Times defines CPI as comprehensive measure used for estimation of price changes in a basket of Goods and services.

So, these include transportation ,food and medical care representative of consumption expenditure in an economy.

However,CPI gives an idea of inflation.

Thus, calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Furthermore, increase in CPI calculated by adding together a sampling of product prices of a previous year.

Thus add together current prices of same products .

Also,divide the total of current prices by old prices, then multiply the result by 100.

again, subtract 100 to find the percentage change in CPI. Dearness allowance base year taken as 2001 for the purpose of dearness allowance calculation.

However, for AICPI you reqested to verify this site

Dearness allowance formula

So, For 1.1.19 dearness allowance rate derived like this that means average prices upto December 2018 taken=(288+288+287+288+301+289+291+302+301+302+301+302)/12=269.91-261.4=8.51*100=851/261.4=3.2approx equals 3% So also for July 2019 average cpi upto June 2019 taken and calculated as given here.

Thus,this is the highest Dearness allowance news to central government employees after 1.1.2016. Dearness allowance declared in the month of August 2019 for July 2019 is 5%.State government Dearness allowance rates are same as central government employees in case of Maharashtra. Dearness allowance current rate is 12%. It includes dearness allowance current and dearness allowance increase.

Dearness allowance v/s HRA

This means Dearness allowance versus house rent allowance. Dearness allowance for central government employees paid twice in a year once in January and then in July. However Dearness allowance declared rate comes in January and Paid in April along with dearness allowance arrears and so also in July and paid in October. For dearness allowance in banks paid quarterly. This is as per announcement of labor Bureau. DA and HRA are % of basic salary.But their percentages are different . This rate depends on CPI. while House rent allowance rate percentage is fixed taking into consideration ABC class cities divided on the basis of population.

Dearness allowance and conveyance

Here Dearness allowance rate is different from conveyance because conveyance is slab wise while DA is percentage. Secondly Dearness allowance paid on Conveyance also. Conveyance is not taxable while dearness allowance is taxable.

Dearness allowance on Tour

While going out of station for official work Dearness allowance and travelling allowance paid to avoid hardship to the official.

Even, For more details see the site specified above.


Now do you understand how your Dearness allowance calculation.

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