New Delhi, June 22 -- Available only to public-sector employees, it is fully taxable and subject to income tax at the applicable slab rate. Notably, DA is adjusted twice a year for inflation by the All-India Consumer Price Index (AICPI). New announcements are usually made in March and October will rollouts in January and July, respectively.

DA hikes are calculated based on the AICPI's 12-month average, using the method prescribed by the 7th pay commission. The formula used is as follows, according to Clear Tax:

For central government employees

DA percentage = [(Average of AICPI (Base Year 2001 = 100) for the last 12 months - 261.42) / 261.42] x 100

For public sector employees

DA percentage = [(Average of AICPI (Base Year 2001 = 100) ...