SynopsisDA hike: Central government employees anticipate a 3% dearness allowance increase. This expectation arises from the latest AICPI-IW reading for June 2026. The calculation suggests a potential 63% overall dearness allowance for employees. This hike will impact salaries across various pay levels under the 7th Pay Commission. The Finance Ministry will officially announce the final dearness allowance increase.ET OnlineDA for central government employeesCentral government employees are likely to get a 3% dearness allowance (DA). This expectation gains more ground after the Labour Bureau of the Finance Ministry released the All India Consumer Price Index- Industrial Workers AICPI-IW reading for June 2026. The June month reading for AICPI-IW was noted at 151.9, as per a tweet from the Labour Bureau. A 151.9 took the average 12-month reading to 148.65 and the DA calculation to 63.76%. Since the government calculates DA in round figures, a 63.76% DA means 63%. However, the actual DA hike will be known only when the Finance Ministry announces it. The DA hike in January 2026 was 2%, so after a 3% hike in June, the overall DA hike for all employees in the 7th Pay Commission is expected to be 63%. Employees will keep getting DA under the 7th CPC till 8th Pay Commission salary slabs are implemented. DA is calculated on the basis of the 12-month average reading of AICPI-IW.Before you continue readingHow financially free are you?Most people overestimate their financial freedom. Discover your Financial Freedom score through a quick survey AICPI-IW index reading from July 2025-June 2026 and DA Month Index Value Jul-25 146.5 Aug-25 147.1 Sep-25 147.3 Oct-25 147.7 Nov-25 148.2 Dec-25 148.2 Jan-26 148.6 Feb-26 148.5 Mar-26 149.1 Apr-26 149.9 May-26 150.8 Jun-26 151.9 Average 148.65 DA 63.76%= 63% How is DA for central government employees calculated? DA is calculated based on a formula- DA% = [{12-month average of AICPI-IW (base year 2001)– 261.42}/261.42x100] However, we will first have to link the 2016 base values to the 2001 base values by multiplying it by 2.88. The factor of 2.88 is arrived at to equate the latest base year (2016) to 2001. Labour Bureau data shows that for August 2020, the value of CPI-IW under the old base (2001=100) was 33.8 and CPI-IW under the new base (2016=100) was 117.4, so the factor is calculated as 338 ÷ 117.4= 2.88. What is the DA rate as per current AICPI-IW reading?DA%= (148.65X2.88)– 261.42}/261.42x100]= (428.12-261.42)/(261.42)X100= .6376X100= 63.76%= 63%How a 3% DA hike can change the salary of employees? Pay Level Minimum Basic Pay (₹ per month) DA amount (at 60%) DA amount (at 63%) Salary hike per month Arrear of 6 months Level 1 ₹ 18,000 ₹ 10,800 ₹ 11,340 ₹ 540 ₹ 3,240 Level 2 ₹ 19,900 ₹ 11,940 ₹ 12,537 ₹ 597 ₹ 3,582 Level 3 ₹ 21,700 ₹ 13,020 ₹ 13,671 ₹ 651 ₹ 3,906 Level 4 ₹ 25,500 ₹ 15,300 ₹ 16,065 ₹ 765 ₹ 4,590 Level 5 ₹ 29,200 ₹ 17,520 ₹ 18,396 ₹ 876 ₹ 5,256 Level 6 ₹ 35,400 ₹ 21,240 ₹ 22,302 ₹ 1,062 ₹ 6,372 Level 7 ₹ 44,900 ₹ 26,940 ₹ 28,287 ₹ 1,347 ₹ 8,082 Level 8 ₹ 47,600 ₹ 28,560 ₹ 29,988 ₹ 1,428 ₹ 8,568 Level 9 ₹ 53,100 ₹ 31,860 ₹ 33,453 ₹ 1,593 ₹ 9,558 Level 10 ₹ 56,100 ₹ 33,660 ₹ 35,343 ₹ 1,683 ₹ 10,098 (Join our ETWealth WhatsApp channel for all the latest updates)...more