8th Pay Commission DA Merger: What's the big deal? Here's the full calculation for govt employees

Central government employees and pensioners are demanding that the 8th Pay Commission merge Dearness Allowance (DA) with basic pay to provide relief from rising prices.

The 8th Central Pay Commission is preparing its report, and employee unions are hopeful about the DA merger.

Under the 7th Pay Commission, DA was calculated using the formula: DA% = (Average AICPI for 12 months – 261.42) / 261.42 × 100.

In April 2026, the Modi government increased DA from 58% to 60% of basic salary for central government employees and pensioners.

A DA merger would increase take-home salary, retirement fund contributions through PF, and benefits like Gratuity and Leave Encashment, which are based on DA.