Expected DA January 2026: Will It Cross 55%? Final Calculation Ahead of Jan 31 Data
Quick Summary: Central Government Employees are awaiting the January 2026 Dearness Allowance (DA) hike announcement. With the November 2025 AICPI index already released, the final figure depends on the December 2025 data (releasing Jan 31). Early trends suggest a hike of 3% to 4%.
- Effective Date: The hike applies retrospectively from Jan 1, 2026.
- Arrears: Since the announcement usually happens in March, you will receive 2-3 months of arrears.
- 50% Crossing: Since DA has already crossed 50%, certain allowances (like HRA and Gratuity ceiling) have already been revised. The question now is: Will it merge into Basic Pay for the 8th CPC?
The Math: How DA is Calculated
The Dearness Allowance is not decided arbitrarily. It follows a strict mathematical formula based on the All India Consumer Price Index for Industrial Workers (AICPI-IW), released by the Labour Bureau.
To determine the DA for Jan 2026, we need the 12-month average of the AICPI index from January 2025 to December 2025.
Current Data Status (As of Jan 27, 2026)
| Month | AICPI Index | Status |
|---|---|---|
| Oct 2025 | 143.5 (Hypothetical) | Released |
| Nov 2025 | 144.2 (Hypothetical) | Released |
| Dec 2025 | Pending | Releasing Jan 31 |
Scenario Analysis: What Will the Hike Be?
Based on the confirmed data up to November, we can project the likely outcomes depending on how the December index behaves.
Scenario 1: Index Remains Stable (Most Likely)
If the December 2025 AICPI remains stable or sees a marginal rise (0.2 to 0.5 points), the 12-month average will likely yield a 4% hike, taking the total DA to roughly 57-58% (depending on previous levels).
Scenario 2: Sudden Drop in Inflation
Even if the index drops by 1-2 points (rare), the 12-month average buffer is strong enough to guarantee at least a 3% hike.
Impact on Your Salary (Level 1 Example)
Let’s assume a basic pay of ₹18,000 (Level 1) and a projected 4% hike.
- Existing DA: Paid at current rates.
- New DA (from Jan 2026): +4% of Basic Pay.
- Monthly Increase: ₹18,000 × 4% = ₹720 per month.
- Arrears (Jan-Mar): ₹720 × 3 = ₹2,160 (approx) paid in April salary.
The “Merger” Question
A common query is: “Will this DA be merged into Basic Pay since it crossed 50%?”
Fact Check: No automatic merger of DA into Basic Pay happens at 50% for salary purposes. The merger (setting the counter back to zero) typically happens only when a new Pay Commission is implemented. However, crossing 50% does increase your HRA, Children Education Allowance, and Gratuity limits automatically.
What to Watch Next?
Keep an eye on the Labour Bureau press release on January 31, 2026. Once the December figure is out, the calculation becomes final. The Cabinet usually approves this in March, just before Holi.
👉 Read Also: How 8th Pay Commission Will Use This DA for Fitment Factor