How DA Arrears are Calculated in Indian Government Pay Scales
When the government announces a Dearness Allowance hike, it applies from 1 January or 1 July, but the order usually arrives months later. Until then you are paid at the old rate. Once the hike is sanctioned, the gap for the earlier months is paid as DA arrears.
The calculation has three steps. First, find the monthly DA increase: Basic Pay × (New DA% − Old DA%) ÷ 100. Second, multiply by the number of months between the effective date and the month the new rate starts being paid. Third, deduct any NPS contribution. For example, on a basic pay of ₹56,100, a rise from 58% to 60% gives ₹1,122 per month, so six months of arrears is ₹6,732 gross.
If your basic pay changed during the arrear period because of an increment or promotion, calculate each period separately and add the results. This calculator assumes one basic pay for all months.
Tax & NPS Rules on DA Arrear Disbursals
For employees under the National Pension System, 10% of Basic Pay plus DA is the employee share, and it applies to DA arrears as well. That is why this tool shows a 10% NPS deduction before the net amount.
DA arrears are taxable salary income in the year you receive them. If arrears relate to earlier years, you can claim relief under Section 89(1) using Form 10E, which may reduce tax caused by bunching of income. Your DDO or a tax professional can confirm the exact treatment, since this tool does not compute income tax.