April 02, 2026
4 mins read
Dearness Allowance (DA) is a cost‑of‑living adjustment paid to government employees and pensioners to offset inflation. It is calculated as a percentage of basic pay and is revised twice a year based on price indices.
DA helps employees maintain their purchasing power as living costs rise. It forms part of salaries and pensions for public‑sector workers and is reviewed in January and July each year. Although most common in government and public‑sector jobs, some private employers also provide a dearness allowance. The allowance is fully taxable and aims to protect real income amid inflation.
The central government revises DA twice a year. As of 1 July 2025, the Union Cabinet approved a 3‑percentage‑point increase, raising DA from 55% to 58% of basic pay. This hike applies to central government employees and pensioners, and arrears are paid along with salaries. State governments often follow similar revisions.
July 2025 hike: The central government raised DA by three percentage points, taking the rate to 58%.
Arrear payments: The increase is effective from 1 July 2025, and arrears are paid with salaries.
Bi‑annual revisions: DA is adjusted in January and July based on inflation indices.
Wider adoption: Many state governments and public‑sector employers adopt similar hikes to support employees.
Global Depositary Receipts (GDRs) are negotiable certificates issued by a foreign depository bank representing shares of an overseas company. They enable companies from emerging markets to raise capital abroad and give international investors access to foreign stocks without navigating local markets. GDRs are denominated in foreign currency, convertible into the underlying shares after a lock‑in period, and entitle holders to dividends.
Definition: GDRs are certificates issued by a depository bank representing shares of a company from another country.
Capital raising: They allow companies to access international capital markets without direct foreign listings.
Structure: Each GDR corresponds to a specific number of underlying shares held by a custodian bank in the home country.
Trading venues: GDRs are listed on exchanges such as London and Luxembourg, making them available to global investors.
Investor benefit: They provide exposure to foreign equities while avoiding local regulatory complexities.
A company deposits its shares with a custodian bank in its home country, and a foreign depository bank issues GDRs representing those shares. The GDRs are listed on overseas stock exchanges, allowing investors to trade them without directly dealing with the underlying shares. Dividends and shareholder rights are passed through the depository bank to GDR holders. After a lock‑in period, investors can convert GDRs into the underlying shares.
Issuance: A European bank holds shares of an Indian company and issues GDRs on the London Stock Exchange.
Representation: Each GDR may represent multiple underlying shares, enabling fractional exposure.
Trading: International investors buy the GDR instead of local shares, avoiding the complexities of foreign market participation.
Dividends: Dividends are received by the depository bank, converted to the investor’s currency and paid to GDR holders.
Price movements: If the company performs well, the GDR price rises, allowing investors to benefit from capital appreciation on an international platform.
Share this article: 
Dearness Allowance is usually revised twice a year by the central government—in January and July. These revisions are based on the changes in the Consumer Price Index over the previous six months. Once approved by the Cabinet, the new rate is announced and applied to the basic salary or pension, sometimes with retrospective effect.
Dearness allowance under the Indian income tax rules is fully taxable as part of your salary. You must report it on your tax returns just like basic pay.
Dearness Allowance is more common in government and public sector jobs, but it can also be offered in the private sector if the employer's pay structure includes it.
Dearness Relief (DR) for pensioners is a fixed percentage of the basic pension equal to the announced DA rate. This amount is adjusted for inflation.
Yes, for government and public sector employees, Dearness Allowance is considered a component of their overall salary package. If you work in the private sector, your employer may not itemise DA separately. However, in most public jobs, DA is explicitly mentioned and included in total cost to company calculations.
Dearness Allowance is generally uniform for all central government employees, regardless of their location. However, House Rent Allowance and other location-based benefits may vary. Some state governments may have different DA structures, but within one government system, location does not typically affect the DA amount.
Yes, once the revised Dearness Allowance is announced, it is paid out monthly as part of your regular salary or pension. If the revision has a retrospective effective date, the difference for the prior months is paid as arrears. You will see the DA component listed in your monthly salary slip.
No, they are different. Dearness Allowance is meant to help you deal with inflation and the rising cost of living, whereas House Rent Allowance is paid to help you cover rental housing expenses. Both are salary components but serve different purposes and follow separate calculation and tax rules.
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
|
