What Is Dearness Allowance (D.A.)?

The dearness allowance is a part of the total compensation a person receives for having performed his or her job. For example, workers in India might have a base salary or pension, along with an allowance for housing and the dearness allowance. D.A. is a percentage of the original salary. The percentage is reviewed and may be changed on a six-month cycle.

One explanation for D.A., according to work guidelines, is that the Dearness Allowance is provided to help against rise in prices for those on pension. This allowance may also be provided to family members receiving benefits from a worker’s pension. For example, a central government order might change the Dearness Allowance by 6 percent for employees of the main branch of government, due to new information about living expenses and price increases. The amount might be paid in a lump sum at some point to bring the overall pension and allowances up to what they should be.

There are also times when a new level of Dearness Allowance might be established along with housing and transportation allowances. This generally occurs when the overall pay schedule is revised. Base salary levels are reported separate from the various allowances. In India the D.A. has a history dating back to World War II. At that time, many of the lower-paid employees received D.A. based on their wages or salaries. Many changes to Dearness Allowance and its computations have occurred over the last 60 years, according to both private and government studies.

One guideline suggests that the D.A. is paid twice each year (January and July) based on a percentage of pay in two specific months. Numbers used to calculate the D.A. include 12-month average of pay and a set index level to get the percentage increase in prices/cost of living. Dearness Allowance is paid on a range of base-pay levels.

DAAccording to the systems developers at tech company Taranaga, the combination of a Dearness Allowance with base pay was approved by the Indian government in New Delhi in 2007. What happened was that the D.A. (that protects pensioners in case of a cost-of-living increase) was combined at a 50 percent level with base pay. One of the details included in the decision also set a “ceiling” for certain benefits. The decision means that those benefits will be calculated on base pay plus daily allowance, rather than just on base pay.

There are similar cost-of-living adjustments and indexes in the United States and other countries. Some of these operate in the same way as the Dearness Allowance in India, giving percentage increases to make up for rising costs. Others are allowances for workers who must live and work in areas where the general cost of housing and meals is higher than a certain base amount. For example, some federal government employees are paid an “overseas” allowance that makes their total pay a bit higher than what they might receive in the U.S. These allowances vary with the country and the location an employee is assigned to.

Category: Jobs

17 Comments on “What Is Dearness Allowance (D.A.)?”


mukund gadgil wrote:

Kindly inform me how to calculate dearness allowance against All India Average Consumer Price Indes Numbers for Industrial Workers. I am working in Insurance Industry.

NIKHIL N KUNSAVALIKAR wrote:

waht is curret rate of da in various industries give catagori wise details . and samely legal status of da accord to laboue law in maharashtra

chithiravel wrote:

i want to know the calculation of DA.

ANIL VERMA wrote:

I want to Know how DA is calculated on salary and How it is shown in Income Tax Return please do the needful
thanks

rupali gupta wrote:

kindly help me to know how to calculate D.A. in Indian private companies.

Ahmed Imran wrote:

I want to know what type of amount should be included as DA component?

Anirudha Kamble wrote:

I would like know how to calculate D.A in private organisation

Okuraye David wrote:

I want to know the formular for caculating DA and what amount should be included when calculating DA?

Srikanth wrote:

How DA is calculated in private IT companies?

vipin datta wrote:

Is DA calculated/paid after deducting commutation value of pm pension amount from Basic Pay or. just 43% of basic pay(without deduction of commuted value pm),If possible send authority,regards. my mail:”vipindatta@gmail.com”.vipin datta.

Raghavendra kulkarni wrote:

i want to know the calculation of DA.

M.K.Munshi wrote:

I am a retired Army Officer. I have recently received the order for revision of Pension consequent to the VIth Central Pay Commission, which is effective 01/01/2006. In Jan 2006, my Basic Pension was Rs 5,903/-,on which my DP(@ 50%) was Rs 2952/- and DR (@24% on Basic Pension+ DA) was Rs 2126/-.Thus Net Pension was Rs 10981/-. Now that my Basic Pension has been revised at Rs.20,628/-.Thus my Net Pension as on 01/01/2006 would work out to: Rs 20,638/-+DP@59% Rs10,319/-+ DR@24% (on Rs 20,638/-+Rs 10,319/-) as Rs 7,429.68/-.Thus Net Pension would be Rs 38,416.68/-.
Please confirm.
Thanks and regards

praheli wrote:

I need to know
1.how to calculate DA
2. who is eligible to get D.A.
3. the increment which is made on D.A/ twice each year is not being applicable to all sectors. like: it has increased at 35% on basic on January 2010 , then 45% on basic on July 2010, but the doctors in medical colleges has received only 8% increment on consolidated salary.how this segregation is made?

riya wrote:

I want to know the formular for caculating DA and what amount should be included when calculating DA?

ishwar wrote:

I want to know that how to see the points of D.A. on the internet.

Fazl wrote:

Why is DA called Dearness Allowance?

Dilip wrote:

Hi,
How DA is calculated, please give me a detailed idea. I am working in a BPO firm.

Regards,
Dilip

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