The central government of India adjusts the Dearness allowance for the central government employees twice a year, in January and July. With 2025 coming to an end, the employees are now wondering about the DA hike. The article covers everything about the DA hike in January 2026.
The DA hike is determined based on the Consumer Price Index to ensure the employees are receiving an allowance based on the current inflation and boost their purchasing power. The Union Cabinet approves the DA hike based on the Finance Ministry’s disclosed recommendation and data.
The DA hike of January 2026 is important as it will be the first after the 7th Pay Commission comes to an end on 31 December 2025. The speculation of the DA hike is made, and many reports revealed that it can be the lowest in seven years.
What’s the projection for the DA hike in January 2026?
The last Dearness allowance was announced in July 2025, and it stands at 58% of the basic salary. Now, the next adjustment will be announced in January 2026. The central government has announced the 8th Pay Commission and approved the Terms of Reference in November 2025.
The DA protects the government employees from the increasing inflation, hence it is calculated based on the Consumer Price Index for Industrial Workers (AICPI-IW). With the DA hike, other allowances will also be increased, which will increase the salary of the government employees.
The projection for the DA January 2026 is out, and many analyses predict that it will increase by 2%, making it 60% of the basic pay. If it increases by 2%, it will be the lowest DA hike in the last seven years. The reason for such a low hike is that the CPI-W, 7th Pay Commission, and 8th Pay Commission have been implemented.
How is the Dearness Allowance calculated?
As mentioned earlier, the calculation depends on the AICPI-IW, so based on the 7th Pay Commission, the following is the DA formula:
- DA% = (Average AICPI (12 months) – 261.42)/ 261.42 100)
For the DA January 2026 calculation, the government will use the AICPI data from July 2025 to December 2025. Based on the released data till October 2025, the index has increased for four consecutive months in each month since July 2025.
How much will your DA and pay be after the increase?
The current DA for the central government employee is 58% of the basic pay. Now, if the 2% increase happens, it will be 60% of the basic pay that will impact the government employees’ pay in the following way:
- Suppose the basic pay for the government employee is ₹30,000, your current DA will be 58% of the pay, that is, ₹17,400. However, now, based on the 60% DA hike in January 2026, your DA will be ₹18,000, which will make the gross income ₹48,000.
- The increase in your pay will depend on your basic pay and the dearness allowance.
- The pensioners will also see an increase in the dearness relief, along with the DA, increasing the basic pension for the pensioners.
When can you expect the DA hike for the January 2026 announcement?
The July-December 2025 CPI-IW data is not fully out; for now, we have data till October 2025. The December 2025 CPI-IW will be out on 12 January 2026; hence, the calculation will take time.
The Union Cabinet approves the DA hike recommendation after it is calculated based on the employees’ demand and need. The process of the Union Cabinet approving the DA hike begins in February or March, so we can expect the official announcement on the hike by March 2026.
How will the January 2026 DA help in future increases?
The 8th Pay Commission is formed, and the Commission has an 18-month deadline to submit its recommendations regarding the pay structure and other components. The Commission revision will also affect the DA and DR for the central government employees and pensioners.
Once the 8th Pay Commission recommendation is implemented, the DA will reset to zero to merge it with the new pay matrix. This scenario makes the current and the coming four DA hikes crucial for the basic pay revision under the new Pay Commission.
So, the January 2026 DA hike will shape the future pay structure under the 8th Pay Commission. With no official timeline for the 8th Pay Commission, the employees can expect the Dearness Allowance to be determined under the 7th Pay Commission rules.
The Dearness allowance hike is important for central government employees, as it is calculated based on the consumer price index and protects employees from inflation. The January 2026 hike is important for future adjustments and pay structure.