Dearness Allowance (DA)
Dearness allowance is a cost-of-living component paid on top of basic salary, revised periodically against inflation, and counted with basic for most statutory calculations.
Also known as: DA, dearness allowance meaning
It is universal in public sector and organised industrial employment and much less common in private white-collar structures, where its function has largely been absorbed into basic or special allowance.
Where it exists it matters disproportionately, because statutory calculations use basic plus DA rather than basic alone. Provident fund contributions, gratuity and the HRA exemption limit all move with it.
Because it is revised against a cost-of-living index rather than by individual decision, a DA revision changes payroll for an entire covered population at once — which is a payroll run to plan for rather than absorb.
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Payroll
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See payrollRelated terms
Basic Salary
Basic salary is the fixed core of an employee's pay, before allowances — and the figure most statutory calculations in India are computed on.
EPF (Employees' Provident Fund)
EPF is India's statutory retirement savings scheme, funded by matching monthly contributions from the employee and the employer on basic salary plus dearness allowance.
Gratuity
Gratuity is a lump sum an employer pays an employee who leaves after five or more completed years of continuous service, calculated as fifteen days' wages for every year served.
HRA (House Rent Allowance)
HRA is a salary component paid towards rented accommodation, part of which is exempt from income tax under the old regime if the employee actually pays rent.