The Indian Government has announced that starting from January 1, 2026, the 70% of the Dearness Allowance (DA) will be included in the basic salary. This decision is part of the 8th Pay Commission and is likely to be advantageous for 48 lakh employees and 67 lakh pensioners.
The merger is not only a small tweaking—it is a total overhaul of the wage palette. DA will be reset to ninety-nine and a new wage architecture will be initiated.
Reasons for the DA Merger to be Important
The employees are provided with the Dearness Allowance, with the sole purpose of compensating for the inflation. After a long time of persistence, DA has inflated remarkably, now being almost 70%. Existence of the DA in the sucal shown by the employee will be more visible in terms of direct cash inflow.
Moreover, the impact of the change extends further to the employee’s retirement benefit, pension and savings pots in the long run since these are determined by the basic pay. The merger, thus, gives a huge relief to the families that are already under pressure from the rising costs of living.
Effects on Employees and Pensioners
The merger is going to impact not just the present employees but also the retired pensioners. The take-home salary of the employees will be higher, while the pensioners’ amounts will also be increased.
Moreover, as the previous trends have shown, the government is likely to clear the backlog for the transition period whenever a new Pay Commission is introduced.
Main Points of DA Merger 2026
There is a clear distinction between the situation before and after the merger:
| Aspect | Before Merger (2025) | After Merger (2026) |
|---|---|---|
| Dearness Allowance (DA) | Around 70% | Reset to 0% |
| Basic Pay | Lower | Increased by 70% DA |
| Salary Structure | Old framework | New framework |
| Pension Calculation | Based on old basic | Based on revised pay |
| Beneficiaries | Employees & Pensioners | Employees & Pensioners |
Conclusion
The DA Merger 2026 is an outstanding reform of the 8th Pay Commission. The government is making certain that the salaries and pensions are in line with the real cost of living by merging 70% DA into basic pay.
This will result in higher monthly income for the employees. The pensioners will get increased retirement security. This merger is a timely measure that will help millions of families in India, considering the inflation is still on the rise.