7th Pay Commission latest news: Ahead of the expected next round of Dearness Allowance (DA) hike in 2023, there’s a big update for central government employees. The existing formula for DA calculation will be replaced by a new one. The formula has been changed by the Ministry of Labor and Employment.
Change in DA calculation formula
The Centre has decided to change the base year for DA hike. A new series of Wage Rate Index (WRI-Wage Rate Index) has been released with base year 2016. The old series with base year 1963-65 will be replaced with new series and base year 2016=100 under the 7th Pay Commission rules.
The DA hike for government employees is calculated based on the current rate of DA employment and basic salary. As per the current rate 12 percent, for a basic salary of Rs 18,000, the calculation is DA (18000×12)/100. The result is divided by 115.76 and then multiplied by 100. DA percent is equal to the average of the CPI over the last 12 months – 115.76.
DA benefit calculation
If the basic salary of an employee is Rs 26,000, then with the 38 percent calculation, DA would come to Rs 9,880. The increase in salary with the next DA hike will come to around Rs 910 for this basic pay if the expected 4 percent hike is approved, taking the figure to 42 percent.
The expected announcement could be made around the Holi festival next year in March. Central government employees will also have to bear tax on DA hikes with DA fully taxable under 7th Pay Commission rules.