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DA stands for Dearness Allowance. It is an element in the structure of the salary in the Indian Payroll System. The main purpose of DA is to protect employees against the impact of inflation. The government generally pays this allowance to the current as well as retired employees, and this amount is a complete taxable allowance.
The DA is given to the employees when there is a hike in the price in the financial year. DA is usually calculated two times in a year, i.e., in the month of January and July. The formula with the help of which DA is calculated is:
For the employees working in the Central government:
% of DA = { [ Average of the All-India Consumer Price Index ( Base year – 2001= 100) for the before 12 months – 115.76 ] /115.76 } X 100
For the employees working in the Public Sector:
% of DA = { [ Average of the All-India Consumer Price Index ( Base year – 2001= 100) for the before 3 months – 126.33 ] /126.33 } X 100
The DA that is applicable to the employees of the public sector is called Industrial Dearness Allowance.
The Dearness Allowance that is applicable to the employees of the central government is called Variable Dearness Allowance.
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