Will DA, HRA and TA Hikes Pause Until the 8th Pay Commission? Here’s the Full Allowance Breakdown

The central government has announced the final Dearness Allowance (DA) revision of the year, raising it to 58% of basic pay, effective from July 2025 under the existing 7th Central Pay Commission (CPC). At the same time, the Centre has formally constituted the 8th Pay Commission, giving it a deadline of 18 months to submit its report.

This has triggered a major question among central government employees and pensioners: Will the revision of allowances such as DA, HRA and TA continue during this transition period, or will all increases stop after December 31, 2025?

Here’s a detailed breakdown of what experts predict.

Will Allowances Continue to Rise?

According to an ET report, experts believe there is no reason to stop DA hikes until the 8th Pay Commission comes into effect. DA will continue to be calculated based on the basic pay structure of the 7th CPC, which means it will keep increasing every six months as usual.

If the 8th CPC takes the entire 18-month period to finalize its report, employees can expect at least three additional DA revisions before the new commission is implemented.

Using a conservative estimate of a 3% rise every cycle:

• Current DA: 58%

• After 6 months: 61%

• After 12 months: 64%

• After 18 months: 67%

Once the 8th CPC comes into effect, this accumulated DA will be merged into the new basic pay, as has been the practice with previous pay commissions.

Which Other Allowances Are Likely to Increase?

Experts indicate that several allowances linked to inflation or basic pay will also see periodic revision before the 8th CPC is notified.

1. House Rent Allowance (HRA)

HRA is directly linked to basic pay plus DA, making an increase almost certain. With DA already rising and expected to touch 60%+ levels, HRA slabs for X, Y and Z cities may see upward revisions as per established rules.

2. Children Education Allowance (CEA)

Allowance increments such as CEA typically apply once DA crosses the 50% threshold. Since DA has already exceeded this level, chances of CEA revision—especially for children with disabilities or hostel subsidies—are strong.

3. Medical and Fixed Medical Allowance (FMA)

For pensioners, an increase in medical allowances is highly likely. The 7th CPC also enhanced medical benefits, and experts expect the 8th CPC to recommend another upward revision considering rising healthcare costs.

4. Transport Allowance (TA)

TA is another allowance that could see a hike before the 8th CPC rollout. However, analysts believe that the 8th CPC may also streamline or restructure smaller allowances, possibly merging or rationalising some of them.

5. Dress Allowance, Risk Allowance and Others

Projected trends suggest increases in certain work-related allowances like dress allowance, risk allowance and performance-based allowances. Some new components may also be introduced in the upcoming pay revision structure.

Will Annual Increments Continue?

Since the 8th Pay Commission is expected to take time—possibly until 2027 for full implementation—employees will continue receiving the 3.5% annual increment under the existing 7th CPC rules. There is no proposal or indication that increments will be halted during the transition.

What About MACP?

The Modified Assured Career Progression (MACP) scheme grants pay upgrades after 10, 20 and 30 years of service. Experts confirm that MACP rules will remain unchanged until the 8th CPC is officially adopted. Employees will continue to receive due MACP benefits during the interim period.

Bottom Line

• DA, HRA, TA and other major allowances will continue to increase as usual until the 8th CPC is implemented.

• At least three additional DA hikes are expected before the 8th CPC takes effect.

• Annual increments and MACP benefits will not be interrupted.

• Medical, education and housing-related allowances are among the most likely to see revisions.