What is Dearness Allowance?
It is an amount paid to pensioners and public sector employees by the Government to balance out the effect of inflation. It is a fixed percentage of the basic salary.
DA rates change two times in a particular year. DA varies on the basis of the cost of living, which means it is not the same for two different places and depends upon the work location of the employee. This means that employees working in rural, urban, and suburban work locations have different rates for DA.
A salaried employee has to pay taxes on the Dearness Allowance.
Central Pay Commission (CPC) takes different aspects of salary into account. DA is also considered in the same.
Dearness Allowance is mainly of two types:
- Variable Dearness Allowance (VDA)
- Industrial Dearness Allowance (IDA)
1. Variable Dearness Allowance (VDA): It is applicable to the employees of the Central Government. Generally revised every six months to balance out the inflation.
2. Industrial Dearness Allowance (IDA): It is applicable to employees from Public Sector Units (PSUs) and also to pensioners by the Government.
History of Dearness Allowance
Starting from World War II, the Dearness Allowance was previously referred to as Dear Food Allowance. The calculation then was different for DA, than now. The rates get modified frequently by Government and are a certain percentage of the base salary.
Characteristics of Dearness Allowance
- Applicable to Government employees.
- VDA for employees of the Central Government.
- IDA for employees of PSUs and pensioners.
- Not compulsory for Private Sector Employees that private companies may or may not have policies for DA.
TA and DA Full Form
TA and DA are two important components of an employee’s salary structure in many organizations. TA stands for Travelling Allowance and DA stands for Dearness Allowance. These allowances are provided to compensate for the additional expenses incurred by employees during travel or due to inflation. In this article, we will dive deep into the full forms of TA and DA and understand their significance in the world of employment. Whether you’re an employee or an employer, this information is crucial to know and understand, so read on to get a clear understanding of TA and DA.