Dearness Allowance (DA) is a type of cost-of-living adjustment that raises the basic pay for government officials and employees in the public sector. It’s worth mentioning that public sector unit employees are government employees, but they aren’t considered civil servants. Additionally, some private sector employees and civil servants are pensioners in India.
Dearness Allowance is determined as a percentage of an Indian citizen’s basic salary, helping to cushion the effects of inflation. Many Indian citizens receive a basic salary or pension, which can be enhanced by a housing allowance, a dearness allowance, or even both. The rules surrounding Dearness Allowance can differ based on your location. It’s important to remember that this allowance is fully taxable.
The two types of Dearness Allowance are:
- Dearness Allowance given under terms of employment.
- Dearness Allowance not given under the terms of employment.
