7th Pay Commission Last Hike: Good news for Govt employees on final increment! DA, DR will be credited in account by…
Although many government employees are awaiting 8th Pay commission formation, there is an update on 7th Pay commission DA hike. According to media reports, the final hike in Dearness Allowance (DA) and Dearness Relief (DR) for July 2025 is expected to be announced soon. This revision will be effective from July and is likely to be credited into bank accounts by October just ahead of the festive season. 7th Pay Commission Salary Hike
Around 1 crore beneficiaries including 33 lakh employees and 66 lakh pensioners are eagerly awaiting this final revision under the 7th Central Pay Commission (CPC). The 7th CPC was implemented in January 2016 and is set to conclude in December 2025. In March this year, the government had raised DA by 2%, taking it from 53% to 55% of basic salary, effective January 2025. The primary purpose of these adjustments is to offset the impact of inflation, making DA a critical component of government employees' salaries.
After this final DA hike, focus will shift to the 8th Pay Commission, which is expected to come into force from January 2026. Typically, when a new pay commission is implemented, the DA is reset to zero because the inflation index baseline changes. For example, before the implementation of the 7th CPC in 2016, DA had reached 125% of basic pay.
According to Ambit Capital, if the DA reaches 60% before the 7th CPC ends, the new pay structure can give a salary increase of around 14%. However, this would be the slowest growth compared to the last four pay commissions. What Can Employees Expect?
DA hikes are calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which tracks monthly retail price changes in a fixed basket of goods and services.
The formula used under the 7th Pay Commission is:
DA (%) = [{12-month average of AICPI-IW (base year 2001) – 261.42} / 261.42] x 100
In March 2025, the government raised DA by 2%, bringing it to 55%, effective from January 2025. These revisions are designed to ease the inflationary burden on employees, making DA a vital part of their compensation.
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