Understanding D.A. in Private Companies: How Is It Calculated and What Percentage Applies?

I want to know about D.A. How is it calculated for a private company? Please explain in detail. I am not clear about the process. What is the percentage to be paid for D.A.?

Dearness Allowance Rates

Dearness Allowance rates will be fixed by the government along with the Minimum Wages notification. Check the Minimum Wage notification for your State/Industry Type and fix your DA accordingly. You should not fix it at a rate lower than the one mentioned in the Minimum Wage notification.

Thank you.

Understanding Dearness Allowance (DA)

DA is a periodic increase in salaries/wages to compensate for an increase in prices. As long as these are above the prescribed minimum wages for each category of employee, do not worry about DA. It is declared by the state government and central government. The process of calculating DA is complex. Normally, 40 to 50%+ of salary/wages should be basic salary, and the rest can be allowances. Please check the applicability of the Minimum HRA Act, as you have not mentioned the state you operate from.

Many queries posted are without basic info, such as the type of organization (factory/establishment), manpower engaged, and location. The applicability of statutes and their sections depends on these factors. Hence, all are requested to incorporate these details in your query. In the absence of these essentials, someone may give wrong advice and cause difficulty for you.

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Shrikant Prabhudesai
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You should follow the minimum wage regulations. Please refer to your state's Dearness Allowance (DA) rate. Otherwise, you should follow 50% of the basic salary as the standard.

Thank you.