The Centre last month increased Dearness Allowance (DA) for central government employees and pensioners with effect from 1 January, according to the 7th pay commission. This has in turn increased DA in basic pay to 60% from 58%, as per a release from the Union Finance Ministry.
Later, on 2 May, the Indian Banks’ Association (IBA) also revised DA for workmen and officer employees across pay levels for the months of May, June and July 2026. It hiked basic salaries between ₹48,000 to ₹1,17,000 and DA from ₹435 to ₹1,050.
It was followed by the Indian Railways on 13 May, which announced 2% DA hike for all railways staff and employees. The Railway Board said DA and Dearness Relief (DR) have been revised for lakhs of employees, pensioners, family pensioners, and other eligible beneficiaries covered under the 7th Central Pay Commission (CPC) framework. Notably, Indian Railways is among the largest public sector employers in India.
Here’s a look at all the states that have also since announced DA and DR hikes:
DA hikes: List of states that have increased DA, DR
- On 6 May, Arunachal Pradesh hiked DA and DR for its employees by 2%, effective from 1 January 2026. DA in basic pay is now up to 60% from 58% and will be implemented for 69,248 regular employees — All India Service Officers serving under the Arunachal Pradesh government, central government employees on deputation to the state government, and all regular state government employees.
Further, the enhanced DR will cover 40,477 individual and family pensioners across the state. Financial burden on the exchequer for the DA, DR hike will cost an estimated ₹100.54 crore for the state, and arrears dues for the January to April 2026 period will likely to be around ₹33.51 crore.
- On 14 May, Tamil Nadu hiked DA for state government employees, pensioners and teachers by 2%, effective from 1 January 2026, taking allocation to 60% of basic salary. The state will bear additional annual expenditure of ₹1,230 crore.
As many as 16 lakh Tamil Nadu state government employees, teachers, individual pensioners, and family pensioners will benefit from this DA hike, as per the official state government release.
- On 14 May, Bihar announced that employees and pensioners under the 6th pay commission will get a 5 percentage point hike in DA and DR, i.e. DA will be raised from 257% to 262%, effective from 1 January.
For employees under the 5th CPC, DA has been increased by 9 percentage points, from 474%to 483%, and for those under the 7th CPC, it has been raised from 58% to 60%.
- On 15 May, Odisha announced a 2% increase in DA for state government employees and pensioners, up from 58% to 60%, effective from 1 January, as per a statement from the Chief Minister’s Office (CMO). It added that this would be paid along with the May salary.
Alongside this, the temporary increase (TI) for pensioners has also been raised by 2% and will be reflected in the May pension. Around 8.5 lakh state government employees and pensioners are expected to benefit from the announcement.
- Meanwhile, the West Bengal government last week approved, in principle, forming its 7th state pay commission to decide salary and DA hikes for state government employees, educational institutions, government corporation and board staff, and state government-aided bodies.
The move is significant as the new panel will revise the salaries of Bengal state government employees. The last DA hike in the state was a 4% increase in February, announced by state finance minister Chandrima Bhattacharya in her interim budget.
- The Joint Action Committee (JAC) of road transport corporation workers’ unions in Karnataka is demanding 25% salary hike and for payment of DA arrears for 38 months (totalling ₹1,272 crore) in a single instalment, and merger of 31% DA component in basic pay, along with increases in daily bata (wages) and other allowances.
What is Dearness Allowance?
DA is a component of central and public sector employees’ salary break-up, aimed at mitigating increased cost-of-living expenses. It is revised biannually by the All-India Consumer Price Index (AICPI) based on inflation metrics in early March and October, followed by rollouts in January and July.
Part of an employee’s cost-to-company (CTC), it is credited as part of the monthly salary for central government employees. It is subject to income tax in its entirety and reported in your I-T returns (ITR). About 50 lakh central government employees, and around 65 lakh retired central government pensioners, including defence retirees benefit from the increases.
How is the DA hike calculated?
Notably, the DA hikes are calculated based on the 12-month average as per the method prescribed by the AICPI under the 7th Pay Commission. Under this CPC, there have been 10 hikes since 2021, with the highest at 11% in July 2021. The past two hikes were 2% and 3%, respectively, for January and July 2025.
According to Clear Tax, since DA is connected to cost-of-living, the amount differs for each employee depending on their work location and can vary depending on the area being urban, rural or semi-urban.
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