7th Pay Commission, Tax Limit on Gratuity: The central government on Thursday evening announced a four per cent jump in dearness allowance (DA) and dearness relief (DR) for crores of central government employees and pensioners. In the meeting where new rates of DA and DR were discussed, Centre also decided to increase the tax exemption limit for gratuity. The government has increased the tax exemption limit on gratuity to Rs 25 lakh.

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Earlier, the limit was Rs 20 lakh, which was increased from Rs 10 lakh in a notification dated March 8, 2019.

7th Pay Commission: 4% increase in dearness allowance

As far as the DA and DR are concerned, after a four per cent hike in each, both have increased from 46 per cent to 50 per cent.

The new rates of DA and DR will be applicable from January 1, 2024.

DA Hike Announced: Central govt employees to get 4% increase in dearness allowance | 7th Pay Commission

This is the fourth consecutive time that DA has been increased by 4 per cent.

The increase in DA will increase the burden on the government exchequer by Rs 12,868.72 crore.

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7th Pay Commission: DA will become 0 after 50 per cent

Central employees will get 50 per cent DA from January 2024.

But, after this, the dearness allowance will be reduced to zero.

After this, the calculation of dearness allowance will start from 0.