Home > Finance > Impact on salary, PF contribution, other information in 10 points

Impact on salary, PF contribution, other information in 10 points


DA calculator: The Union Cabinet on July 14th, 2021 approved the Dearness Allowance (DA) restoration for central government employees from 1st July 2021. While announcing about the cabinet decision, the Information & Broadcasting Minister Anurag Thakur said that the DA hike will benefit 1.14 crore central government employees and pensioners. He also informed that the approved DA is 28 per cent that means a central government employee’s DA will jump from existing 17 per cent to 28 per cent — registering 11 per cent hike in central government servants’ DA.

DR benefit to 60 lakh pensioners

The cabinet decision will benefit around 60 lakh central government pensioners too as their Dearness Relief (DR) benefit will also get restored and resumed along with the DA benefits of the central government employees. However, the Central Union Minister made it clear that the DA and DR arrears for around 1.14 central government employees and pensioner won’t be given for January 2020 to June 2021 period.

DA hike impact on central government employees’ salary

As central government employees’ DA will rise from 17 per cent to 28 per cent from 1st July 2021, their monthly salary is expected to rise in sync with the DA hike. This hike can be calculated on the basis of basic salary of the employee. If a central government employee’s monthly basic salary is 20,000 then its existing DA per month is 3400 while after increase in DA, monthly DA payable to the same central government will be 5600. Similarly, other central government employees can check about the rise in their monthly DA amount.

Here we list out the following 10 important information in regard to DA hike:

1] DA and DR rate will jump by 11 per cent as existing DA rate is 17 per cent while the approved DA and DR rate applicable from 1st July 2021 is 28 per cent.

2] DA hike will lead to rise in monthly Provident Fund (PF) and gratuity contribution of the employees as monthly PF and gratuity is deduction on the basis of an employee’s basic salary and DA. As DA has gone up, one’s monthly PF and gratuity contribution will also go northward.

3] To pare against the inflation rise, DA is announced twice in a year for January to June and July to December period.

4] This DA and DR hike will put an additional annual burden of 34,401 on the government exchequer.

5] For this financial year, this DA and DR hike will put 22,934.56 crore burden on the government exchequer.

6] The DA and DR hike will be restored in July that means central government employees and pensioners will get increased DA and DR benefit from July 2021.

7] Union Minister Anurag Thakur also said that DA and DR rates for January 2020 to June 2021 period will remain 17 per cent for central government employees.

8] That means central government employees and pensioners won’t be given three installments of DA and DR arrears due from 1st January 2020, 1st July 2020 and 1st January 2021.

9] In March 2020, center had announced 4 per cent DA that means DA for central government employees would have become 21 per cent from January 2020 but due to the freeze of DA and DR benefits, DA remained at 17 per cent till June 2021.

10] The DA hike announced for July to December 2020 period was 3 per cent while DA hike for January to June 2021 period is 4 per cent. This 28 per cent DA approved by the union cabinet is summation of all DA hikes announced during the period when DA and DR benefits were freezed.

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