What is dearness allowance, how does the government calculate DA, know everything
What is dearness allowance, and how does it work? Dearness Allowance is no less than a reward for employed people. It is added to your salary so that you can get some relief from the rising inflation in the country. Many people think that DA is given to all employed people, but DA is given only to the employees of the central government and the state government. DA is not given to private employees.
What is a dearness allowance?
DA is a benefit of government employees through which they can save themselves from rising inflation every year. The government (central or State) gives additional allowances to government employees in addition to the basic salary to maintain their standard of living so that they do not have to bear the brunt of inflation.
Dearness allowance money is given to government employees, public sector employees, and pensioners. The government calculates DA once every 6 months. Currently, 42 percent of DA is given.
How is DA calculated?
There is a fixed formula for calculating, and DA is calculated accordingly.
The formula is [(Average All India Consumer Price Index of last 12 months – 115.76)/115.76]×100
The DA of people working in the public sector is calculated in this way. Dearness Allowance Percentage = (Average of Consumer Price Index of last 3 months (Base Year 2001=100)-126.33) 100
Inflation is decided based on retail inflation
DA is decided based on retail inflation and not wholesale inflation. Retail inflation is what we and you pay after purchasing any item.
Do we have to pay tax or not?
The DA given to you is completely taxable income. It was first introduced in the year 1972.
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