somaladurga Started The Discussion:
I want to know the Calculation of DA %. I know that the DA is Calculated on Basic Pay but how much % we should take to calculate DA. everybody say that it is calculated on Basic Pay but nobody are explaning the %. Will it differs from sector to sector i mean to say that the calculation of DA will be different for Central Government, State Government, Public Limited companies and Private Limited Companies. Please somebody help me in this matter.
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M.Peer Mohamed Sardhar
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this is absolutly wrong.
DA has got a complex calculation. You get the DA from the Labor Office every month. which varies with the type of industry.
But how it is calculated i do not have much idea. THere are certain parameters like the cost of living index ..etc taken into account for the calculation.
Correct me if I'm wrong.
I am totally agree with ash_achu.
DA is calulated and decided by Govt. Authorities and revised after every six month. DA remains constant for each type of workman ( i.e. ASkilled, un-skilled & semi-skilled). It varies from type of Industry.
From Labour Commissioner office you will get the notification of revision. U can also get it from Current labour Report or APS ( labour Digest).
Dearness Allowance (DA) is a compensatory payment to the employees for the erosion in the real value of their salaries, resulting from price increase. It is necessary for even Software Companies to show DA as a component of the salaries they pay to their Employees, just because the Govt. of India, in all its wisdom, has included this component in their definition of "salaries". So, for the calculation of PFcontributions, Bonus, Gratuity, and other benefits, Basic Salary + DA is considered.
Most companies have "merged" Basic and DA, and show it as a consolidated amount (Basic + Fixed DA). However, most Public Sector Companies, as well as Govt. Organisations & Departments use the following method for the calculation of DA.
DA is calculated with reference to the percentage increase in the 12 monthly average of All India Consumer Price Index(AICPI) (base 1960) over the average index of 608, which is the base for the existing scales of pay for Central govt. Employees. This percentage increase is taken in whole numbers only.
Thus, the formula for calculating DA is :
12 Monthly Average - 608 of AICPI
--------------------------------- x 100 = The % increase in prices.
The % increase in prices is factored with basic salary, and you arrive at the amount of DA figure.
eg. if % increase is 12%, and basic is Rs. 10,000.00, the DA would be Rs. 1,200.00. The present index being considered is I think 2000.
The DA calculation for the different type industries fixed by the Government vide its notification. There are two type of DA calculation. One is FDA (FIXED)other one is (VDA) VDA. Fixed Dearness will remain same changes are made by the government/company policy. Whereas VDA is calculated on Consumer Price Index basis it is announced by the Statistical Department everymonth. There are two kinds of Price Index Number one is All India Price Index Number other is State Price Index Number. The State Consumer Price Index Number varies from every metro distrcts according to the cost of living. At the Staff and other level the declaration of DA is the Policy matter of employer. The percentage and Fixation of DA is purely employer choice.
Considering the living cost and all, Wage Revision is being done once in five years or ten years. But inflation will go up day by day and subsequently the money value will come down. To compensate this we have to wait till the next Wage Revision, which is not practical. That is why the DA is introduced.
The devaluation of money can be assessed through Whole Sale Price Index, All India Cosumer Price Index etc. The difference between these two is that, price variation of all commodities are taken into account for Whole Sale Price Index. But the All India Consumer Price Index is based on a particular cosumer viz. Industial Worker and that even, on some specified commodiies & services called "Basket of goods".
Based on All India Consumer Price, Industrial DA being paid; variable in quarters commencing from January, April, July & October. I.e. for January the AICPI will be the average of previous September, October & November. Similarly for April it will be December, January & February, for July it will be March, April & May and for October it will be June, July & August respectively.
When the money devaluation is fully compensated it is called as full DA neutralisation. The formula for full DA neutralisation = (Total points - Base points)/ Base points (in percentage). The AICPI is introduced in India in 1960 and revised in 1982 & 2001. AICPI of 2001 x 4.63, we get AICPI of 1982 and AICPI of 1982 x 4.93, we get AICPI of 1960. For DA calculation AICPI of 1960 is accepted as the base.
Now in India mainly two term's wage settlements are in exist; Wage Settlements of 1.1.1997 & 1.1.2007. The base point in 1.1.1997 is 1708 & in 1.1.2007 is 2884.
I shall quote one example,i.e. calculation of AICPI for July '10. This is equalent to average of previous March, April & May; which recorded as 170, 170 & 172 (Base year 2001). Multiply with 4.63 and round, we get 787,787 & 796 (Base year 1982). Multiply with 4.93 and round, we get 3880,3880 & 3924 (Base year 1960). Find average of these 3 and round, we get 3895.
DA for 1.1.97 scale. Total points - 3895, Base points - 1708, Total - Base = 2187. % is 2187/1708 x 100 = 128.0 ( Correct to one decimal).
DA for 1.1.2007 scale. Total points - 3895, Base points - 2884, Total - Base = 1011. % is 1011/2884 x 100 = 35.1 ( Correct to one decimal).
I shall insert Excel sheet for IDA calculation w.e.f 1.10.2008. You may extent the rows further (as necessary) and just enter the 3 indexes towards the year 2001 in green colour columns. The results will appear in yellow and red is used for static informations.
ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
+91 9447 467 667
AICPI (base 20010 can be had from the following site.
Labour Statistics Page 2
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Topic Categories >> company policy consumer price index basic pay variable da central govt dearness allowance basic salary commodities labour commissioner industrial da central government Location-India-Hyderabad
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