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 raise the DA rate from 60% to 63% of basic pay, translating into an additional monthly allowance for central government employees. 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.

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 are 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 posting city.

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.

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.

Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.

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