The dearness allowance (DA) for the central government employees is likely to be hiked by 5 percent, taking the overall hike to 63 percent. This is as the Ministry of Labour and Employment retained the AICPI-IW index at 148.2 for December 2025. Recently, the DA for bank employees has also been revised. The revised DA rate is 25%, marking an increase of 1.07% from the previous rate. This increase will be with effect from 01.02.2026. [Click here to check DA hike of Bank Employees]
What is AICPI-IW?
The All India Consumer Price Index for Industrial Workers is a key input for revising dearness allowance for central government employees and pensioners to safeguard salaries and pensions from the impact of inflation.
The Centre has kept the AICPI-IW index unchanged at 148.2 and the dearness allowance may be raised by 5 percent. This means the DA will be hiked 63 percent,” said Manjeet Singh Patel, president of the All India NPS Employees Federation.
The revision of dearness allowance is due in January 2026 as part of the biannual cycle. The government had increased DA from 54 percent to 58 percent in July 2025. Following the routine practice, the Centre will likely implement the hike in DA for central government employees in March-April 2026.
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When will Employees receive new salary?
Employees can hope to receive their DA hike in April’s salary, which will cover the arrears from January 2026. With December’s AICPI-IW at 148.2, the central government employees will see the hike in DA be raised by 5%, from the current 58 percent to 63 percent.
How is DA calculated?
DA (%) = [{(Average AICPI-IW of last 12 months × 2.88) − 261.41} / 261.41] × 100 − Existing DA (%)
148.2 × 2.88 = 426.81
426.81 – 261.41 = 165.4
165.4 ÷ 261.41 = 0.63
0.63 × 100 = 63.00
63-58 = 5% DA
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Transport Allowance will also be Hiked?
Central government employees receive Transport Allowance to meet their daily commuting expenses. Whenever the Central Government revises Dearness Allowance (DA), the Transport Allowance is also revised by the same percentage.
As per the 7th Pay Commission, the amount of Transport Allowance depends on the employee’s pay level and the city where they are posted. Cities are classified into X, Y and Z categories, with employees posted in X-category cities receiving a higher allowance compared to those in Y and Z cities.
Transport Allowance is paid as a fixed monthly amount, and DA is applicable on it. Employees at Pay Level 14 and above who are eligible for an official car but do not use it receive ₹15,750 per month as Transport Allowance. Employees with disabilities are entitled to double the applicable Transport Allowance.
Let’s take an example of the central government employee in Pay Level 5 posted in a Y-category city who draws a base transport allowance of Rs 1,800. When the dearness allowance is raised to 63 percent, his transport allowance will increase by Rs 1,134, taking the total to Rs 2,934.
Click here to check DA hike of Bank Employees
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