The Finance Ministry of India has announced a 2% increase in the Dearness Allowance (DA) for central government employees and pensioners, raising it from 58% to 60% of their Basic Pay, effective January. This adjustment is aimed at helping approximately 50 lakh employees and 65 lakh pensioners manage the rising cost of living. The DA is revised twice a year based on the All-India Consumer Price Index (AICPI), with announcements typically made in March and October. The most significant increase in DA occurred in 2021, when it rose by 11%. It's important to note that DA is part of an employee's cost-to-company (CTC) and is fully taxable. Additionally, the DA amount can vary based on the employee's location, reflecting local cost-of-living differences. The 8th Central Pay Commission (CPC) is also set to review allowances and salaries, with consultations scheduled for 2026.