Dearness Allowance is awarded to the employee against the price riseto mitigate the impact of inflation in the country .Rules is that Employee cannot claim for the full rental amount he’s paying. The exemption is based on the least of the actual amount allotted by the employer as the HRA and Actual rent paid less 10% of the basic salary.
DA calculation in salary
Dearness Allowance as per 7th CPC Basic Pay= (Avg of CPI-IW for the past 12 months – Average of CPI-IW recorded in 2015)*100/ (Average of CPI-IW recorded in 2015)
As per 7th pay commission the new formula to calculate dearness allowance.
= ((12 Months Average of AICPIN)-261.4)*100/261.4)
Dearness Allowance payable with effect from 7th CPC Basic Pay = (Avg of CPI-IW for the past 12 months – Average of CPI-IW recorded in 2015)*100/(Average of CPI-IW recorded in 2015)
The dearness allowance was introduced as a component by the government. After 2006, the formula for calculating the cost of living allowance has been modified is calculated as indicated below for all the following employees:
For employees of the central government:
Dearness allowance = ((Average AICPI (reference year 2001 = 100) during the last 12 months -115.76) / 115.76) * 100
For employees of the central public sector after 1/1/2007:
Dearness allowance = ((Average AICPI (reference year 2001 = 100) during the last 3 months -126.33) / 126.33) * 100
Where, AICPI represents the consumer price index of all of India.
As of January 1, 1996, the allocation of costs is included to compensate for price increases or inflation in a specific year. As a result, it is reviewed twice a year, that is, once on January 1 and then on July 1.
2018 the Delhi Union Cabinet increased the number of retired employees and employees by 5 to 7 percent. This has been applicable since January 1, 2018. This extra facility in the dear allowance is for Dearness Relief to retired employees and central government employees. The increase was thought to compensate the inflation. The increase is in line with the recommendations of the 7th pay Committee.
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