The decision was approved at a Union Cabinet meeting chaired by Prime Minister Narendra Modi. The additional financial burden on the government exchequer will amount to ₹10,016 crore annually. The increase is intended to help employees and pensioners cope with the impact of rising inflation.
The key question for employees is how much their monthly salary will increase following the 3% DA hike. The calculation varies according to the minimum basic pay under each pay level, from Level 1 to Level 10.
For employees under Level 1, with a minimum monthly basic salary of ₹18,000, the DA will rise from ₹10,800 at the existing 60% rate to ₹11,340 at the revised 63% rate. This translates into a monthly increase of ₹540. At Level 2, with a basic salary of ₹19,900, the DA will increase from ₹11,940 to ₹12,537, adding ₹597 per month.
Employees under Level 3, whose minimum basic pay is ₹21,700, will see their DA increase from ₹13,020 to ₹13,671, resulting in an additional ₹651 per month. At Level 4, the minimum basic pay of ₹25,500 will attract DA of ₹16,065, compared with the earlier ₹15,300, an increase of ₹765.
For Level 5 employees with a minimum basic salary of ₹29,200, the monthly DA will rise from ₹17,520 to ₹18,396, adding ₹876. At Level 6, employees drawing a minimum basic pay of ₹35,400 will receive DA of ₹22,302 instead of ₹21,240, representing a monthly increase of ₹1,062.
At Level 7, the minimum basic pay of ₹44,900 will result in DA rising from ₹26,940 to ₹28,287, an increase of ₹1,347 per month. Level 8 employees, with a minimum basic salary of ₹47,600, will see their DA increase from ₹28,560 to ₹29,988, adding ₹1,428.
For Level 9, employees drawing a minimum basic pay of ₹53,100 will receive DA of ₹33,453, compared with the existing ₹31,860, resulting in an increase of ₹1,593 per month. At Level 10, the minimum basic salary of ₹56,100 will attract DA of ₹35,343 instead of ₹33,660, adding ₹1,683 every month.
The timing of the revised salary payments and arrears remains an important concern for employees. According to the provided details, employees will not receive the increased DA with their October salary because the salary cycle runs from the 15th of one month to the 15th of the following month. The arrears for July to October, covering four months, are expected to be paid along with the salary due at the end of November.
However, C. Srikumar, secretary of the All India Defence Employees Federation (AIDEF), said the organisation would ask the government to release the arrears before Diwali so that employees do not face financial constraints during the festival. The demand comes as employees await the implementation of the revised DA rates and payment of the outstanding amount.
The benefit of the DA revision will not be limited to employees covered by the Seventh Central Pay Commission. Employees governed by the Sixth and Fifth Central Pay Commissions will also receive revised rates. Under the Sixth Pay Commission, the DA rate has increased from 262% to 269%, while under the Fifth Pay Commission, it has risen from 483% to 497%.
The revised DA rates have been determined on the basis of the 12-month average of the All India Consumer Price Index for Industrial Workers (AICPI-IW) between July 2025 and June 2026, which stood at 148.65.
Despite the increase, employee organisations maintain that the revision does not fully compensate for the actual rise in the cost of living. C. Srikumar said the prices considered by the Labour Ministry while calculating the index were significantly lower than actual retail prices in the market. He expressed hope that the upcoming Eighth Pay Commission would address this significant discrepancy.
The 3% DA hike is expected to provide additional financial support to millions of central government employees and pensioners. However, the timing of arrears payments and expectations from the Eighth Pay Commission remain key issues for employee organisations.
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