The Centre on Friday increased the dearness allowance (DA) for central government employees and pensioners by 4% with effect from January 1, 2020.
The decision was approved in a Cabinet meeting chaired by Prime Minister Narendra Modi.
Union minister Prakash Javadekar said the government has hiked DA by 4%, which means the allowance has been increased from 17% of basic pay or pension to 21%.
Here’s is what you need to know:
* The decision taken by the Centre will benefit 48 lakh government employees and 65 lakh pensioners, Javadekar said.
* It will be beneficial for 1.13 crore families, he said.
* The hike in dearness allowance, a component of the salary paid to government employees, will cost the government Rs 14,595 crore, he added.
* The payments will be made from January 1 this year.
* Dearness allowance is given to serving employees and pensioners of the central government every year from January 1 and July 1 and normally paid in March and September respectively.
* DA is calculated on the basis of a rise in inflation and prices of essential commodities. The government takes into account the All India Consumer Price Index for Industrial Workers for calculating DA .
* DA is fully taxable and is decided on the basis of the city in which the employee’s office is located. So, DA is more for employees in an urban area and lesser for those who live in semi-urban areas and villages.
* The Centre had implemented the Seventh Pay Commission in January 2016 when the salaries were hiked.