How to calculate Dearness Allowance

How to calculate Dearness Allowance

Calculation of DA Rates

DA rates for Government employees are to be announced half yearly which will be applicable from first January and First July.

On implementation of Sixth Pay Commission recommendations with effect from 01.01.2006 a new method of calculation of DA (dearness allowance) rates is adopted by Central and State Governments.

DA rates are fixed on the basis of All India Consumer Price Index (AICPI) for industrial workers with Base year as 2001.

Method of Calculation

DA is calculated using the following formula

Dearness Allowance = (Avg of AICPIN for the past 12 months – 115.76)*100/115.76

(Fractions are ignored)

Example:To calculate Jan 2015 DA rate Price index average from Jan 2014 to Dec 2014 is taken.

Jan-14

237

101.71

Feb-14

238

102.79

Mar-14

239

103.87

Apr-14

242

105.02

May-14

244

106.17

Jun-14

246

107.25

Jul-14

252

108.48

Aug-14

253

109.63

Sep-14

253

110.71

Oct-14

253

111.57

Nov-14

253

112.29

Dec-14

253

113.3

Jan-15

254

114.52

Feb-15

253

115.6

Mar-15

254

116.68

Apr-15

256

117.69

May-15

258

118.7

Jun-15

261

119.78

Jul-15

263

120.57

Aug-15

264

121.36

Average

 

246.92

(November and December indexes are not actual s, based only on average for calculation purposes)

Dearness Allowance=(01.01.2014)=( 246.92-115.76)*100/115.76=113.29

DA (after ignoring fraction)=113%

So  DA Rate is 113%

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