New Delhi, April 30 -- The Finance Ministry last week announced revision in Dearness Allowance (DA) for central government employees and pensioners (including railways and defence personnel), from 58% to 60% of Basic Pay, with effect from 1 January 2026.

DA is by practice revised twice a year by the All-India Consumer Price Index (AICPI) to counter inflation fluctuations. New announcements generally occur in early March and October, with rollouts in January and July. The allowance is a percentage of employees' basic salary specifically meant to help with increased cost-of-living.

DA and House Rent Allowance (HRA) and two different components of your salary break-up and are taxable under different heads.

One key difference is that while...