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After December, 2019 month AICPIN released, it is very much Confirmed that the Government Employees and Pensioners will get 21% DA of their Basic Pay from 1st January, 2020. There is 4% increase in DA from July, 2019 to all the Government Employees. Maximum Benefit will be Rs. 7,500 in case of Basic Salary is Rs. 250,000/-. Notification from Government will be out in the Mid of March, 2020.

As AICPIN for December 2019 increased by 2 Basic Points and now at 330, Remaining December month CPI for Industrial Workers to Calculate Dearness Allowance from 1.1.2020 will not have any impact on it.

What is Dearness Allowances :

As per Income Tax Act, ” The Dearness Allowance (DA) is a cost of living adjustment allowance paid to government employees, public sector employees (PSE) and pensioners in India “.

Dearness Allowance is paid by the government to its employees as well as a pensioner to offset the impact of inflation. The effective salary of government employees requires constant enhancement to help them cope up with the increasing prices. Despite several measures by the government to control the rate of inflation, only partial success has been achieved because the prices move according to the market. It, therefore, becomes essential for the government to shield its employees from the adverse effects of inflation. As the impact of inflation varies according to the location of the employee, dearness allowance is calculated accordingly. Thus, DA varies from employee to employee based on their presence in the urban, semi-urban or rural sector.

Useful Articles :

How to Calculate DA ?

✔ Formula for calculating Dearness Allowance for Central government employees after 1.1.2006 is :

Dearness Allowance %= {(Average of AICPI(Base year 2001=100) for the past 12 months – 115.77)/115.77}*100

✔ Formula for calculating Dearness Allowance for Central public sector employees after 1.1.2007 is :

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

✔ Dearness allowance increases twice a year for the Government Employees in the month of January or July of a particular year, once the AICPI(IW) for a particular month is published by the Government, whereas for PSU employees it is declared quarterly by DPE (Department of Public Enterprise).