Around 1 crore central government employees and pensioners are waiting for a big salary increase because the government is expected to announce the next round of dearness allowance (DA) and dearness relief (DR) hikes soon. These hikes happen twice a year, in July and December, but are often announced with a delay and usually credited to employee and pensioner accounts around October, which is just in time for festival season. This year’s DA hike will be the last under the 7th Pay Commission, which began in January 2016 and is ending in December 2025.

Earlier this year, in March, the government announced a 2 percent increase in DA, making it 55 percent of basic pay, up from 53 percent. This adjustment helped government workers and pensioners combat inflation. DA hikes rely on the Consumer Price Index for Industrial Workers (CPI-IW), which measures changes in retail prices for common goods and services.

For July 2025, experts have calculated the upcoming DA by using CPI-IW values averaged over the last year and adjusting the index to fit the formula set by the 7th Pay Commission. After all calculations, the expected DA comes to about 58 percent of basic pay—an increase of 3 percent from the current 55 percent. For example, if someone has a basic salary of Rs 25,000, their DA will rise from Rs 13,750 to about Rs 14,500.

The 8th Pay Commission, which will decide pay and allowances going forward, has not yet started its process. The government hasn’t outlined who will be in charge or set official terms. Most experts think the next commission may take another year and a half to two years before fully rolling out its new recommendations. Although the 8th Pay Commission will be effective from January 2026, employees will likely get their increased salaries as arrears once it is officially implemented. When a new pay commission starts, DA is set back to zero because the entire pay structure gets revised.

Government employees and pensioners can expect a 3 percent hike in DA and DR in October 2025, with the DA reaching around 58 percent of basic pay. This will be the final hike under the current pay commission before the transition to the 8th Pay Commission, which will reset DA and may take up to two years to be fully implemented.