Dearness Allowance (DA) Calculation for PSU Employees – Q3 2025–26 (October 2025 to December 2025)
As we know, Dearness Allowance (DA) is paid as a fixed percentage of the basic salary. For instance, if an employee’s basic salary is ₹50,000 per month and the DA rate is 30%, then the DA payable will be ₹15,000 per month. This amount is paid in addition to the basic salary and other allowances such as House Rent Allowance (HRA).
The Ministry of Labour and Employment publishes the Consumer Price Index (CPI), which is used as the benchmark for determining the applicable Dearness Allowance (DA) rate. The Ministry has released the CPI-IW figures for June 2025, July 2025, and August 2025 (copy of the circular attached).
| Month | CPI-IW index |
| June 2025 | 145.00 |
| July 2025 | 146.50 |
| August 2025 | 147.10 |
Based on the CPI-IW indices published by the Ministry of Labour and Employment, the Dearness Allowance (DA) for the third quarter of the financial year 2025–26 (i.e., October 2025 to December 2025) has been computed at 51.80%, as against 49.00% for the second quarter of 2025–26, reflecting an increase of 2.80%.
DA (Dearness Allowance) for recent quarters:
| FY | Quarter | Period | DA rate | Change (%) |
| 2023-24 | Q1 | Apr 2023 – Jun 2023 | 37.70% | |
| 2023-24 | Q2 | Jul 2023 – Sep 2023 | 39.20% | 1.50% |
| 2023-24 | Q3 | Oct 2023 – Dec 2023 | 43.80% | 4.60% |
| 2023-24 | Q4 | Jan 2024 – Mar 2024 | 43.70% | -0.10% |
| 2024-25 | Q1 | Apr 2024 – Jun 2024 | 44.30% | 0.60% |
| 2024-25 | Q2 | Jul 2024 – Sep 2024 | 44.80% | 0.50% |
| 2024-25 | Q3 | Oct 2024 – Dec 2024 | 47.70% | 2.90% |
| 2024-25 | Q4 | Jan 2025 – Mar 2025 | 49.60% | 1.90% |
| 2025-26 | Q1 | Apr 2025 – Jun 2025 | 48.70% | -0.90% |
| 2025-26 | Q2 | Jul 2025 – Sep 2025 | 49.00% | 0.30% |
| 2025-26 | Q3 | Oct 2025 – Dec 2025 | 51.80% | 2.80% |
The relevant CPI and DA% can be shown with the help of below diagram:
The methodology for calculation of DA for Q3 2025-26 is explained below:
For the purpose of Dearness Allowance (DA) computation, the adjusted CPI (i.e., Multiplied CPI) is taken as 2.88 times the published CPI. The average of the CPI for the last three months (immediately preceding the applicable quarter) is considered for the calculation.
| Month | CPI-IW index | Adjusted CPI | Remark |
| June 2025 | 145.00 | 417.60 | CPI-IW index * 2.88 |
| July 2025 | 146.50 | 421.92 | CPI-IW index * 2.88 |
| August 2025 | 147.10 | 423.65 | CPI-IW index * 2.88 |
| Average adjusted CPI | 421.06 |
Hence, the DA applicable for the third quarter of the financial year 2025–26 (i.e., October 2025 to December 2025) is computed as:
[(421.06-277.33)/277.33]*100 = 51.83% ~ 51.80%
This is higher than 49.00% in the second quarter of 2025–26, resulting in an increase of 2.80% in DA for Q3 2025–26.
Also Read:
Consumer Price Index for Industrial Workers (2016=100) – June, 2025
Consumer Price Index for Industrial Workers (2016=100) – August, 2025
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