7th Pay Commission July DA Hike: Even as the central government employees are awaiting the constitution of the 8th Pay Commission, the delay indicates that the staff will receive at least one more DA hike
under the current 7th Pay Commission. The dearness allowance (DA) hike is announced twice a year — effective January and July. Going by the inflation trend, the July 2025 DA hike for central government employees is likely to be at 3-4%.
The DA hike is announced twice a year in February-March and September-October, with retrospective effect from January and July each year, respectively. It helps employees offset the impact of inflation.
When Will The July 2025 DA Hike Be Announced?
The DA hike that becomes effective from July was announced in the month of October for the past two years, 2023 and 2024. However, the July DA hike in 2022 was announced in the last week of September.
So, going by the past announcements, the DA hike this year is expected to be announced in the last week of September or near Diwali in October.
Importantly, this is an expectation. Any formal DA hike announcement will be made by the government during a Cabinet briefing.
Though the Union Cabinet typically approves the new DA rate in September and October, it is paid out with arrears from July.
How Much July-December 2025 DA Hike Is Expected?
Currently, DA is at 55% and it is expected to increase by 3% to 58% in the next revision period, according to the Financial Express. This will be the last DA revision under the 7th Pay Commission, as the term of the commission ends on December 31, 2025.
How Is DA Hike Calculated?
The hike in dearness allowance (DA) is calculated based on the Consumer Price Index for Industrial Workers (CPI-IW), which is released monthly by the Labour Bureau. The government calculates the DA hike by averaging CPI-IW data for the preceding 12 months, and applying a specific formula under the 7th Pay Commission:
DA (%) = [(12-month average CPI-IW – 261.42) ÷ 261.42] × 100.
The figure 261.42 is the base CPI-IW average (2016 base year) set under the 7th Pay Commission.
7th Pay Commission DA Hike: How Much Will Salary Increase?
On a 3% DA hike, the salary of the entry-level central government employee, who has a basic salary of around Rs 18,000 per month, will increase nearly Rs 540 per month, effective from July 1, 2025.
If somebody’s salary is Rs 30,000 per month and has Rs 18,000 as the basic pay, he or she now gets Rs 9,990 as dearness allowance, which is 53 per cent of the basic pay. However, after the expected 3 per cent hike, the employee will get Rs 10,440 per month, which is Rs 540 higher.
When Will 8th Pay Commission Be Formed?
Though the 8th Pay Commission was announced in January 2025. The government has yet to define the Terms of Reference (ToR) or appoint members to the new commission. According to a report by Kotak Institutional Equities, the 8th CPC is unlikely to be implemented before late 2026 or early 2027 as the 8th CPC ToR and members are yet to be announced.
The 6th and 7th CPCs took roughly 1.5 years to prepare their reports after being set up, followed by a 3-9 month implementation window after the Cabinet approval.
The brokerage firm also said a fitment factor of 1.8 might be adopted, and the minimum pay level is likely to increase from Rs 18,000 to Rs 30,000 per month.
The fitment factor is a multiplier used to revise the basic salary of central government employees based on recommendations by a Pay Commission; it adjusts the existing pay structure to arrive at the new pay levels.
Kotak stated that the fiscal cost of the 8th CPC is expected to be in line with previous pay commissions, amounting to around 0.6-0.8% of GDP. That translates into an additional government expenditure of Rs 2.4-3.2 lakh crore.
Roughly 3.3 million central government employees would be directly impacted, with Grade C staff, who make up nearly 90% of the workforce, benefiting the most.
