DA hike news 2026 July: Diwali gift is here for Central Government employees - 3% Dearness Allowance approved; DR too
The Union Cabinet has approved a 3-percentage-point increase in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners, Union Railways Minister Ashwini Vaishnaw announced on 28 October 2026. The decision will benefit around 48.54 lakh central government employees and 68.71 lakh pensioners.
Calling the increase a Diwali gift from Prime Minister Narendra Modi, Vaishnaw said the Cabinet had approved the revision at its meeting on Wednesday. According to the Press Information Bureau (PIB), the revised rates will be effective from 1 July 2026.
The hike takes DA and DR from 60% to 63% of basic pay and pension, respectively. The combined annual impact on the government exchequer is estimated at ₹10,016.10 crore, according to the official announcement. The increase follows the accepted formula based on the recommendations of the 7th Central Pay Commission.
The additional amount employees receive will depend on their basic pay. A 3-percentage-point increase in DA translates into an additional 3% of basic pay every month.
For instance, an employee drawing basic pay of ₹18,000 will receive an additional ₹540 per month. For an employee with basic pay of ₹25,000, the monthly increase will be ₹750. Someone with basic pay of ₹50,000 will receive an additional ₹1,500 per month.
Since the revised rate is effective from 1 July 2026, eligible employees will also be entitled to the difference for the period between the effective date and implementation of the revised rate. The actual arrears payable will depend on the applicable salary period and government instructions.
DA is intended to help government employees offset the impact of inflation on household expenses. The Centre typically revises the allowance twice a year, with changes effective from January and July.
Dearness Relief is paid to eligible central government pensioners to help offset the impact of rising prices. The increase from 60% to 63% will raise the DR component of their pension.
For example, a pensioner drawing a basic pension of ₹20,000 will receive an additional ₹600 per month. A pensioner with a basic pension of ₹30,000 will receive an additional ₹900 per month, before any applicable deductions or other adjustments.
The revised rate will also apply retrospectively from 1 July 2026, with eligible pensioners entitled to the corresponding difference for the applicable period.
The latest revision increases the inflation-linked component of salaries and pensions while adding to the government's expenditure. With more than 1.17 crore employees and pensioners expected to benefit, the decision will provide additional income support to households dependent on central government salaries and pensions.
Employees and pensioners should check the relevant government orders for implementation details and the schedule for payment of revised allowances and arrears.
Kirti jha
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
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HomeMoneyPersonal FinanceDA hike news 2026 July: Diwali gift is here for Central Government employees - 3% Dearness Allowance approved; DR too
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