New Delhi, September 7: In a big festive relief, the central government is expected to announce a 3% hike in Dearness Allowance (DA) for employees and Dearness Relief (DR) for pensioners in the first week of October 2025. This will benefit more than 1.2 crore central government employees and retirees. With this revision, DA will increase from the current 55% to 58%, effective retrospectively from July 2025. Employees will also receive three months’ arrears, which are likely to be added to their October salaries—making it a Diwali gift ahead of the October 20–21 festival.

DA is revised twice a year based on the Consumer Price Index for Industrial Workers (CPI-IW). The latest average CPI-IW figure, from July 2024 to June 2025, stood at 143.6, which translates to a DA of 58% as per the 7th Pay Commission formula. For example, an employee with a minimum basic salary of INR 18,000 will see DA rise from INR 9,900 to INR 10,440, meaning an additional ₹540 monthly. Similarly, a retiree with a INR 20,000 pension will get about INR 600 more. 8th Pay Commission Update: Government to Focus on Higher Basic Pay, DA Merger and Simplified Salary Structure for Employees and Pensioners From January 2026.

What makes this hike special is its significance as the last DA hike under the 7th Pay Commission, whose term ends on December 31, 2025. The government is yet to notify the Terms of Reference (ToR) for the upcoming 8th Pay Commission or appoint its chairman and members. This has heightened anticipation among employees and pensioners, as the next Pay Commission is expected to overhaul salaries, pensions, and allowances for the coming decade. 8th Pay Commission: Will It Introduce a New Healthcare Scheme for Central Government Employees and Pensioners or Strengthen the Decades-Old CGHS?

Last year, the Modi government had announced the DA hike on October 16, ahead of Diwali. This year too, the announcement is timed to bring festive cheer, but it also carries the added weight of being the final revision under the 7th CPC.

(The above story first appeared on LatestLY on Sep 07, 2025 01:27 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).