How to calculate DA(Dearness Allowance)?

Posted on 19th Jul 2018 | 2211 views

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Dearness allowance calculation

Dearness allowance calculation is made on the basic salary and the amount noted is then added to the basic salary along with other components like HRA, etc. Dearness allowance was initially well known to individuals as Dearness food allowance, as it played a key role in controlling negative impact of increasing prices of food on individuals. Dearness allowance is a variable component and is included so as to facilitate the employee to overcome the inflammation in the market.

Calculate dearness allowance

DA calculation formula

DA calculation formula varies for central government employees and central public sector employees and to the IT and Non IT companies. Formula for calculating the DA separately is given below:

Central government employees

Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 12 months – 115.76)/115.76}*100

Central public sector employees

Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 3 months - 126.33)/126.33}*100

Calculate dearness allowance using the above formula and add that to your basic take home along with other allowances to calculate your gross salary. DA is taxable for salaried employees. A 2% additional DA has been issued by the central government to the central government employees as well as pensioners.

With dearness allowance formula mentioned above, it would turn easy for you to calculate your DA that falls as a part of your salary.

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