Rs 540 to Rs 1,683 extra per month: How much will your salary rise after DA hike?

The Union Cabinet has approved a 3-percentage-point hike in Dearness Allowance (DA) for central government employees and Dearness Relief (DR) for pensioners. The increase will take the rates from 60% to 63% of basic pay and pension, respectively, bringing additional money to their monthly income ahead of Diwali.The decision will benefit around 48 lakh central government employees and 68 lakh pensioners. Announcing the decision after the Cabinet meeting on Wednesday, October 28, Union Minister Ashwini Vaishnaw described the increase as a Diwali gift from Prime Minister Narendra Modi. The hike will have a financial implication of Rs 10,016 crore.HOW MUCH WILL YOUR SALARY INCREASE AFTER THE DA HIKE?The actual increase will depend on an employee's basic pay and pay level. Since DA is calculated as a percentage of basic pay, those earning a higher basic salary will receive a larger monthly increase.According to BankBazaar, at Level 1, an employee earning Rs 18,000 will receive an additional Rs 540 each month, adding up to Rs 6,480 over 12 months. At Level 2, the monthly gain will be Rs 597, taking the annual increase to Rs 7,164. Credit: BankBazaar.com At Level 3, the extra Rs 651 per month will amount to Rs 7,812 a year. For employees at Level 4, with a basic pay of Rs 25,500, the monthly increase will be Rs 765, or Rs 9,180 annually.The benefit crosses Rs 1,000 a month at Level 6. Employees with a basic pay of Rs 35,400 at this level will receive Rs 1,062 extra every month, which works out to Rs 12,744 over a year. At Level 7, the additional amount will be Rs 1,347 a month, or Rs 16,164 annually. The monthly gain increases to Rs 1,428 at Level 8, Rs 1,593 at Level 9 and Rs 1,683 at Level 10. For employees at Level 10, this translates into an additional Rs 20,196 over 12 months.While the increase may offer some relief from rising household expenses, financial experts say employees can also use the additional income to strengthen their savings.Adhil Shetty, CEO of BankBazaar, said the latest increase follows the established formula linked to inflation data under the 7th Pay Commission."At Level 3 and Level 8, basic pay of Rs 21,700 and Rs 47,600 respectively, the increase adds Rs 651 and Rs 1,428 a month, with arrears due separately," he said.Shetty said what employees do with the additional money could make a difference to their finances over time. Instead of allowing the extra income to disappear into everyday spending, employees could consider directing it towards savings or investments."What matters next is where that money goes. Channelled into a recurring deposit, an SIP, or an emergency fund rather than daily spending, even a modest hike can gradually build into meaningful savings over time," he said.DA AND DR: WHAT IS THE DIFFERENCE?Dearness Allowance is paid to serving central government employees, while Dearness Relief is provided to pensioners. Both are intended to help offset the impact of inflation on their income.The latest increase will raise both DA and DR from 60% to 63%. For employees, the additional amount will depend on their basic pay, while the increase for pensioners will depend on their applicable basic pension.The hike is expected to provide some additional financial support to employees and pensioners during the festive season. For households looking to make the most of the increase, setting aside even a part of the extra income could help build a financial cushion over time.- Ends