Industrial dearness allowance or IDA is the allowance applicable to employees of the public sector enterprises. Presently, DA is calculated as per the following formula: % of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 12 months -115.76)/115.76} x 100, % of DA = {(Average of the All-India Consumer Price Index (Base year -2001 =100) for the last 3 months -126.33)/126.33} x 100. As per the recent announcement by the central Government in Budget 2018, the Dearness Allowance was hiked by 2%. The central govt employees and pensioners will now keep receiving the DA at the rate of 17% till July 2021. The state government also announced that the additional instalments of the Dearness Allowance and Dearness Relief which was due from 1 July 2020 and 1 January 2021 will not be paid. Several other components are then calculated added in respect to the basic salary and are then added to it to calculate the take-home amount. There are three components that make up VAD. You will receive a call shortly from our customer support. This is supposed to be a great salary booster for employees since all other components of the salary are calculated as a percentage of the basic salary. Variable Dearness Allowance (VDA) applies to the employees of the Central Government. Pay commissions take into account all the factors that feed into the calculation of salaries of personnel in the public sector. Pensioners who are staying abroad without reemployment are allowed to receive D.A. It is applicable only to the public sector employees and pensioners. After 2006, the formula for calculating dearness allowance has changed and currently DA is calculated as follows, Dearness Allowance % = ((Average of AICPI (Base Year 2001=100) for the past 12 months -115.76)/115.76)*100, Dearness Allowance % = ((Average of AICPI (Base Year 2001=100) for the past 3 months -126.33)/126.33)*100. COVID-19 cover with monthly payments. Each month, a certain percentage of your salary (usually, a percentage of your Basic Pay) is invested in it. Currently, D.A. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. The state government will, however, continue to pay the DA and DR at the rate of 17%, but the employees and pensioners will not receive the arrears was due from July 1, 2020 and January 1st, 2021. DA calculation is very simple. The given below is the salary breakup calculator to know the individual amounts of your basic salary. This percentage varies from company to company, and is usually between 8% and 12%. It, therefore, becomes essential for the government to shield its employees from the adverse effects of inflation. Currently, the dearness allowance makes up 50% of the basic salary. Dearness Allowance must not be confused with the HRA as they are two separate components and are treated differently for income tax. Calculation of Dearness Allowance (DA) DA Calculation Formula for the Central Government Employees: Dearness Allowance (%) = [(Average of AICPI (With Base Year 2001 = 100) for the last 12 months – 115.76)/115.76] * 100 According to rules and regulations, if the percentage of dearness allowance crosses the 50% mark, then it mandatorily needs to be merged with the basic salary. remains fixed unless the government revises the basic minimum wages. IDA for government sector enterprises is revised quarterly based on the movement of the Consumer Price Index (CPI) in order to compensate for the rising inflation in the country. The memorandum also states that the beneficiaries will not receive any arrears from January 1st, 2020 to June 30th, 2021. Union Minister Prakash Javadekar said that the government has increased the Dearness Allowance to 17% from 12%. The Income Tax Act mandates that tax liability for Dearness allowance will have to be declared in the filed returns. Due to the novel pandemic COVID-19, the Chief Minister of Haryana, Manohar Lal Khattar and the government of Haryana took a call to freeze the Dearness Allowance of the employees and the Dearness Relief for the pensioners till July 2021, according to an official statement put out by the Haryana Finance Department. Dearness Allowance is calculated as a percentage of an basic salary.The guidelines that govern the DA vary according to where one lives (for example, whether rural or urban). This also includes the periodic reviewing and updating the multiplication factor for calculation of DA. For calculation, DA is divided into two separate categories: Industrial Dearness Allowance and Variable Dearness Allowance. Since, this allowance is related to the cost of living, the Dearness Allowance component differs for various employees based on their location. Dearness Allowance is cost of living adjustment allowance which the government pays to the employees of the public sector as well as pensioners of the same. Same is the case with Dearness Allowance; every time DA is increased by a certain percentage, the same change gets reflected in the pensions of retired public sector employees. One significant difference is that HRA applies to both private and public sector employees, while only public sector employees are entitled to DA. DA component of the salary is applicable to both employees in India and Bangladesh. The Dearness Allowance is a calculation on inflation and allowance paid to government employees, public sector employees and pensioners in India, Bangladesh and Pakistan. The Pension Rule 50.A. Also, under the Income Tax Act, 1961, it is mandatory to declare one’s tax liability for D.A. Our article Salary,Allowances,Dearness Allowance,Government Salary, Pay Commission discusses it in detail Presently, it stands at 50% of the basic salary. January 2020. Then there are another 55-lakh retired central government employees who are eligible for a pension. These changes are going to significantly benefit all the employees and pensioners of the Central Government. Write a program to calculate his gross salary. It is paid by the government to employees of the public sector and pensioners of the same. The Central government at this time is also considering hiking the dearness allowance by four percent in January. Dearness allowance is calculated based on the inflation of the prices in the market. For HRA calculation, the salary you get is defined as the sum of dearness allowances, basic salary and other commissions. A percentage of the salary has been paid to the employee as his / her cost of living. As DA is provided to employees to protect against the price rise in a particular financial year, it is calculated twice every year – in January and July. The government has recently announced through an office memorandum that it has decided to put the hikes on the dearness allowance (DA) on hold for pensioners and govt employees till the month of July 2021. Pensioner’s Dearness Allowance is computed on the basic pension of an employee without commutation. in order to compensate for inflation or price rise. In January 2016, the Dearness allowance rates have reached at 125%. The Industrial Dearness Allowance for public sector employees undergoes quarterly revision depending on the Consumer Price Index to help offset the impact of rising levels of inflation. 7th Pay Commission latest news today: For all central government employees waiting for the Dearness Allowance (DA) announcement for January to June 2021 period, there is a piece of good news. As the impact of inflation varies according to the location of the employee, dearness allowance is calculated accordingly. Is Dearness Allowance same as House Rent Allowance ? Enter your number below. HRA is applicable to both employees from the private sector as well as the public sector whereas DA is majorly applicable to employees working in the public sector. The union cabinet is expected to take a decision on this matter soon. Indian citizens may receive a basic salary or pension that is then … The DA is (49000 x 12) /100. Similarly, whenever the D.A. The third component remains fixed until the government revises the minimum wages. It is a part of your take-home amount. If you do not get commissions or dearness allowance then the house rent allowance will be 40 percent or 50 percent of your basic salary. The Income Tax rules in India require the dearness allowance component to be mentioned separately in the returns that have been filed. House Rent Allowance HRA, which is part of the basic salary, is fully or partially exempt from taxes. The Industrial Dearness Allowance for public sector employees undergoes quarterly revision depending on the Consumer Price Index to help offset the impact of rising levels of inflation. VAD or Variable dearness allowance is the allowance that comes as a result of revision every six months for central government employees. 40% of basic and dearness allowance (50% in case of metro cities). In addition to this, the freezing of DA and DR till July 2021 will help the Centre around Rs.37,500 crore and the state Rs.82,500 crore and this amount will be used in helping the government tackle COVID-19 in the state as a stimulus package. The Chief Minister of Odisha announced on February 14th, 2020 a 5% increase in Dearness Allowance (DA) for government employees. 7th Pay Commission 7th Pay Commission latest update: Big changes likely in Salary, DA, PF, Gratuity, travel allowance; know details here. Dearness allowance is given to central government employees to help them bear their expenses keeping inflation in mind. Normally, the Basic Salary is the actual salary and DA is taken as a percentage of this basic. This page is best viewed in Chrome, Firefox or IE 11. How to Calculate Dearness Allowance for Central Government Employees and Pensioners after implementation of 7th Pay Commission and introduction new Consumer Price Index with base 2016=100? (VDA) applies to the employees of the Central Government. As of today, the DA is 50% of the employee’s basic salary after years of a steady increase in the DA percentage. No, the private sector employees in India are not entitled to receive Dearness Allowance as a part of their salary. Since the year 2006, the dearness allowance for employees from the public sector has been continuously growing. Request received - loud & clear!Returning you to where you were... (You can save searches, track your apps & save plenty of time!). As per the 6 th pay commission the rate in 2015 January was 113% where the rate has increased to 119% in July 2015. All public sector employers pay basic salaries to their employees according to the respective pay scale. The memorandum is dated as on April 23th, 2020. (12% is the norm). Basic salary is a fixed amount to be paid to an employee addition of any allowances or subtraction any deductions. So, while the cost of living keeps on rising, Dearness Allowance (DA) is paid by the government to its employees to offset the inflation impact and help them cope up with the rising prices. D.A. Dearness Allowance must not be confused with the. It is calculated twice per year i.e. Therefore, 10% of the employee’s salary will be provided under the Odisha Revised Scales of Pay Rules for the financial year 2019-2020. According to various sources, the increase in DA will benefit around 3.5 lakh employees. is part of a person's salary. According to fresh media reports, the government has decided to increased dearness allowance by 4 percent, thus meaning, the dearness allowance of central employees will increase from 17 percent to 21 percent. The salary is taken for the period the employee occupies the accommodation. © 2021 ‐ Defmacro Software Pvt. Please re-enter your phone number. The arrears from the period of January 1, 2020 till June 30, 2021 will not be paid. Download ClearTax App to file returns from your mobile phone. In order to lessen inflation effects on the salaries of these employees, the dearness allowance hike is usually offered to pensioners and staffers. As per an estimate, there are more than 50-lakh central government employees who receive the salary from the government. On the basis of the recommendation of the 7th Pay Commission, the cost of this hike will go up to Rs.16,000 crore and will be effective from July 2019. Only the CPI or Consumer Price Index changes every month and affects the overall value of the variable dearness allowance. Based on this figure, the DA of employees is revised and rolled out. grants public sector pensioners and family pensioners D.A. Efiling Income Tax Returns(ITR) is made easy with ClearTax platform. No, Dearness Allowance and House Rent Allowance are two different items of you Salary. No, the private sector employees in India are not entitled to receive Dearness Allowance as a part of their salary. Dearness allowance is a cost of living adjustment allowance paid to the government employees and pensioners.It is one of the components of salary, and is counted as a fixed percentage of the person's basic salary.It is adjusted according to the inflationary trends to lessen the impact of inflation on government employees. Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Dearness allowance is given to the employees as per their basic salary. After the Second World War, DA component was introduced by the government. Since, DA is directly related to the cost of living, the DA component is different for different employees based on their location. Just upload your form 16, claim your deductions and get your acknowledgment number online. It is revised every six months according to the Consumer Price Index to help offset the impact of rising levels of inflation. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. From the year 1996, DA has been included to compensate for price rise or inflation in a particular financial year and hence it is revised twice every year, once in January and then in July. on pension. The Union Cabinet has recently announced a hike of 5% in the DA for employees and pensioners. Despite several measures by the government to control the rate of inflation, only partial success has been achieved because the prices move according to the market. This amount is then added to the basic salary along with house rent allowance to get the total salary. 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