A big good news has come for the central government employees. The government plans to pass a resolution for 18 months of DA arrears, which is likely to benefit around 1 crore employees. According to this proposal, each employee can get arrears of around Rs 2,30,000. This decision can prove to be a big relief for the employees, especially in this era of inflation.
The proposal covers the period from January 2020 to June 2021, during which the DA increase was put on hold due to the COVID-19 pandemic. Now the government has decided to give DA arrears for this period, which is a big relief for the employees.
What is DA arrears and its importance
DA or Dearness Allowance is a type of allowance given to government employees and pensioners to provide relief from inflation. It is given as a fixed percentage of the basic pay and is revised from time to time.
DA Arrears means the outstanding DA amount for the past period. When the government increases DA, the increase is applicable retrospectively. Thus, employees get increased DA for previous months also, which is called DA arrears.
Overview of DA Arrears Scheme
| Description | Information |
| name of the scheme | 18 months DA arrears |
| beneficiary | Central Government Employees and Pensioners |
| period covered | January 2020 to June 2021 |
| Estimated number of beneficiaries | about 1 crore |
| Estimated Profit Per Employee | Approximately Rs 2,30,000 |
| Total Estimated Expenses | approximately Rs 2 lakh crore |
| Expected date of implementation | FY 2024-25 |
How are DA arrears calculated?
Calculating DA arrears is a complex process, involving many factors. Primarily, it is based on the following steps:
- Basic Pay: The basic pay of the employee is the basis of DA calculation.
- DA Percentage: DA percentage declared by the government.
- Time period: The period for which the arrears are being given.
- DA Increase: Increase in DA during this period.
For example, if the basic salary of an employee is Rs 50,000 and DA has increased from 17% to 28%, then the arrears for an increase of 11% will be calculated as follows:
Arrears=Basic Salary×DA Increase%×Number of Months
Arrears=Basic Salary×AndIncrease % x number of months
Arrears=50,000×11%×18=Rs 99,000
Arrears=50,000×11%×18=Rs 99,000
Who will benefit from DA arrears?
The following sections are likely to benefit from this DA Arrear Scheme:
- Central Government Employees: Employees working in all ministries and departments.
- Employees of Central Autonomous Institutions: Like Universities, Research Institutes etc.
- Pensioners: Retired Central Government employees.
- Defense Personnel: Army, Navy and Air Force personnel.
Financial impact of DA arrears
The implementation of this scheme is likely to impose an additional financial burden of approximately Rs 2 lakh crore on the government. However, this amount could also provide a major stimulus to the economy:
- Increase in consumption: With employees having extra money, demand in the market will increase.
- Boost to the economy: Increased consumption will increase economic activities in various sectors.
- Increase in tax revenue: Increased transactions will also increase the tax revenue of the government.
DA arrear payment process
The process of payment of DA arrears may take place in the following stages:
- Government Approval: Formal approval by the Central Government.
- Budget Allocation: Allocation of required funds by the Finance Ministry.
- Departmental Action: Calculation of amount by each Ministry and Department for its employees.
- Payment: Transfer of amount directly to the bank accounts of employees.
Impact of DA arrears on employees
Receipt of this DA arrears can have many positive effects on the lives of employees:
- Financial Security: Employees will get financial security by getting a large amount of money.
- Opportunity to repay loans: Many employees will be able to repay their old loans.
- Investment possibility: The extra money can be invested for the future.
- Improvement in standard of living: Employees can use this amount to improve their standard of living.
DA arrears and inflation
Payment of DA arrears may also impact inflation:
- Short-term effects: More money flowing into the market may increase demand, which may increase inflation.
- Long-term effects: Increased demand can lead to increased production, which can be beneficial to the economy.
DA Arrears and Pensioners
DA arrears hold special significance for pensioners:
- Increase in income: Pensioners dependent on fixed income will get relief.
- Health expenses: With increasing age, additional money will be available for health expenses.
- Quality of life: Pensioners will be able to improve their quality of life.
DA Arrears and Tax Implications
The impact of tax on DA arrears is an important aspect:
- Income Tax: DA arrears comes under the purview of income tax.
- Tax Slab: Receiving a large amount can put employees in a higher tax slab.
- Tax planning: Employees need to plan carefully to optimize their taxes.
Disclaimer:This article is for informational purposes only. Although this information has been collected from reliable sources, it may not be completely accurate or current. Any official announcement or decision regarding DA arrears will be valid only through government notifications.
Readers are advised to refer to the latest government guidelines and notifications before taking any action. The author or publisher will not be responsible for any loss or consequences arising from reliance on the information provided in this article.
