Will DA and DR hike to 50% lead to merging into basic pay for central government employees, pensioners? What experts have to say | India Business News – Times of India

by The Technical Blogs

7th Pay Commission Dearness Allowance hike: The Dearness Allowance (DA) for central government employees recently rose by 4% to reach 50%. Similarly, Dearness Relief (DR) for central government pensioners also increased by 4% to 50%. These changes are effective from January 1. There’s speculation about whether DA and DR will automatically merge into the Basic Pay when DA hits the 50% mark, as seen in a previous instance.
Will DA/DR merge into Basic Pay for central government employees and pensioners?
As per an ET report, contrary to expectations, there won’t be an automatic merger. According to Sanjeev Kumar, Partner at Luthra and Luthra Law Offices in India, the 7th Pay Commission report did not suggest such a measure. Therefore, DA or DR will not be automatically merged into Basic Pay now that it has reached the 50%-mark.
According to Arjun Paleri, Partner at BTG Advaya, the 5th Pay Commission recommended merging DA with basic salary when it crossed the 50% mark. He cites an example of this, stating that in 2004, DA amounting to 50% of Basic Pay was merged to create dearness pay for calculating allowances and retirement benefits. This affected both central government employees and pensioners.
Nevertheless, subsequent pay commissions, including the Sixth Pay Commission, chose not to pursue this merger, as noted by Abhishek Awasthi, Partner at RR Legal Partners LLP.
ALSO READ | Dearness Allowance hiked to 50%: Top things central government employees should know about DA hike, change in HRA
Will central government employees’ salary structures change with DA at 50%?
As DA reaches 50%, various allowances linked to it will increase for central government employees. Shri Venkatesh, Managing Partner at SKV Law Offices, explains that allowances like house rent allowance, daily allowance, and gratuity ceiling rise along with DA, aiding employees in coping with the rising cost of living.
Here’s a list of allowances expected to increase:
1. House rent allowance
2. Children’s education allowance
3. Special allowance for childcare
4. Hostel subsidy
5. Transportation allowance on transfer
6. Gratuity ceiling
7. Dress allowance
8. Mileage allowance for own transport
9. Daily allowance
It’s important to note that the allowances mentioned above can vary based on service, location (city), and specific regulations, including case-specific allowances such as child education and child care These allowances will differ from one employee to another, depending on the components and pay scale.

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