In a big news flash for the employees and pensioners of the central and state governments, there has been an announcement for a 4% Dearness Allowance (DA) hike in April 2025 on the backdrop of rising inflation. This will be effective from January 1, 2025, and takes the DA rate to 57%. This will benefit lakhs of employees and pensioners who will have extra income to offset inflation.
Basis And Calculation Of DA Hike
The Dearness Allowance is announced based on the Consumer Price Index numbers published by the Central Statistics Office. With inflation picking up in the past months, the possibility of DA hike was being anticipated. Generally, this announcement is usually made in the months of March and September but now, it was released in April 2025.
How Much Will The Salary And Pension Increase?
If your basic pay is ₹50,000, you will receive an extra ₹2,000 every month due to the 4% DA raise. The pensioners’ income will also benefit similarly. All employees under the Seventh Pay Commission will receive this benefit. The state government employees are also likely to get the DA raised according to their state’s announcement.
What Will Be The Tax Impact?
The DAs will increase the salary income of employees but the same will be taxable. Since DA forms part of salary, it is subject to income tax. However, if the government announces any tax exemption in this regard, working employees will get additional relief.
When Will The Arrears Be Available?
Its effectiveness will be Jan 1, 2025, but it will be paid from April 2025. It means the employees will also be paid their arrears from January to March 2025, and this will be done as a lump-sum payment.
What Is The Status Of State Governments?
Some state governments have also announced the implementation of DA hike:
- Uttar Pradesh and Bihar have approved a 4% DA hike.
- These states are currently considering it: Maharashtra and West Bengal.
- An additional 2% DA is assured by Tamilnadu.
Final Advice
- The official notification of the DA hike is awaited.
- Make sure that your salary department can give you updated information.
- Consult a tax consultant for tax planning.
Conclusion
On behalf of millions of employees and pensioners, the DA hike announced for April 2025 has come as a great relief. This hike will not only result in an increase in income but will also counter inflation.
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