Understanding Dearness Allowance: How Is It Calculated and Updated?

Calculation of Dearness Allowance

Dearness Allowance is calculated based on the Cost of Living Index (Shimla points), which is determined by the cost and dearness of commodities. This calculation is done by the Labour Department, with publications made monthly by the government in this regard. The department publishes updates twice a year, and based on these updates, the DA is revised.

Information regarding the calculation of DA can be obtained from various publishers, providing full details on the process.

Regards,
Satish B

Calculation of Dearness Allowance

Dear Mr. Sathish, the cost of living index is calculated and published by the Labour Bureau in Shimla. This organization is part of the Ministry of Labour, Government of India. Different years and different places are taken as a base for calculating the CLI. Dearness allowance for different companies/establishments depends on the terms and conditions of employment, agreement, or settlement which will provide the CLI to be followed, the base point, and the rate at which for every specified increase in the CLI the employer/management has to increase the dearness allowance. In the case of "workmen" covered by the Industrial Disputes Act, usually, the dearness allowance is determined through negotiations and settlements. There is no specific legal requirement that a particular series of CLI should be followed by the employer. This is usually decided by mutual agreement.

Regards,

Kindly guide me on how to calculate IDA for April 2013. It would be greatly appreciated if there is an available formula in an Excel sheet.

Kind regards,
Walia