7th Pay Commission nears end; 1 crore staff brace for last DA boost before long wait ahead

Around 1 crore central government employees and pensioners are eyeing a final salary bump under the 7th Pay Commission, with the dearness allowance (DA) and dearness relief (DR) hike for July 2025 expected to be announced soon. While the hike takes effect from July, the money usually hits accounts by October — just in time for the festive season.

This upcoming hike will be the last under the 7th Pay Commission, which came into effect in January 2016 and concludes in December 2025. It will cover nearly 33 lakh employees and 66 lakh pensioners.

In March this year, the government raised the DA by 2 percentage points — up from 53% to 55% of basic pay — effective January 2025. This adjustment aims to cushion inflation’s impact on earnings, a key component in a government employee’s salary.

So, what can employees expect from the July 2025 DA revision? The hike is calculated using the Consumer Price Index for Industrial Workers (CPI-IW), which tracks monthly retail price changes across a fixed basket of goods and services.

The formula used under the 7th Pay Commission is: DA (%) = [{12-month average of AICPI-IW (base 2001) – 261.42}/261.42] x 100

Meanwhile, all eyes are on the 8th Pay Commission, set to take effect from January 2026. However, the government has yet to finalize its terms of reference or appoint any members. Experts estimate a delay of 1.5 to 2 years before implementation, which means employees could receive arrears for the gap period.

According to Ambit Capital, if DA rises to 60% before the 7th Pay Commission ends, salaries could increase by around 14% under the new framework. Still, this would mark the slowest growth in earnings seen across the last four commissions.

As history shows, DA resets to zero when a new pay commission kicks in due to index rebasing. For instance, prior to the 7th Pay Commission in 2016, DA had touched 125% of basic pay.

While the final DA hike under the current commission may offer a brief lift, the real wait is now for the 8th Pay Commission and the structural reset it will bring.