Dearness relief

Dearness relief is the inflation adjustment paid on a central government pension, granted under Rule 52 of the Central Civil Services (Pension) Rules, 2021 at 60% of basic pension with effect from 1 January 2026, ordered by the Department of Pension and Pensioners’ Welfare through Office Memorandum No. 42/02/2024-P&PW(D)/E-9475 dated 24 April 2026. It is the pensioner’s counterpart of the dearness allowance paid to serving employees, at the same percentage and from the same date.

Dearness relief is the part of a pension that moves. The basic pension is fixed at retirement and changes only when a pay commission revises pensions, so over a retirement of 25 or 30 years the inflation adjustment does the work of holding the pension’s real value, and it can grow past the basic pension itself. At 60% it already adds Rs. 5,400 a month to the minimum pension of Rs. 9,000 and Rs. 75,000 a month to the maximum of Rs. 1,25,000.

Two features separate dearness relief from a simple percentage top-up, and both favour the pensioner. It is computed on the full basic pension even where the pensioner has commuted part of it and is drawing a reduced monthly figure, and it is paid on family pension on the same terms as on a service pension. Against those, Rule 52(2) withdraws it altogether for the period a pensioner is re-employed in government, save in a narrow case defined by three cumulative conditions.

This article sets out the current rate and the order that fixed it, the categories of pensioner the order reaches, how the amount is worked out and rounded, the treatment of the commuted portion, dearness relief on family pension and on the additional pension after 80, the re-employment bar in Rule 52 and the exemption employed family pensioners enjoy, the 2020 freeze and the arrears that were never paid, the tax position, and what happens at a pay commission revision. The load-bearing figures match the dearness allowance article, because the two are the same percentage.

What dearness relief is

Dearness relief is a statutory relief against price rise, granted under Rule 52(1) of the CCS (Pension) Rules, 2021 to pensioners, to family pensioners, and to persons drawing a compassionate allowance under Rule 41 of those rules. The rule does not itself fix a rate. It empowers the Central Government to specify the rate and the conditions from time to time, which is why the entitlement lives in a rule and the number lives in an Office Memorandum issued twice a year.

The economic function is to hold the real value of a pension. A pension fixed at retirement loses purchasing power as retail prices rise, and dearness relief offsets that by adding a percentage of the basic pension that climbs with the price index. The same idea, applied to the pay of serving employees, is the dearness allowance.

Dearness relief is a distinct element of the monthly payment throughout. It is not merged into the basic pension, it does not become part of the basic pension for any purpose, and it is shown separately on the pension slip. That separation matters at a pay commission revision, when the accumulated relief is absorbed into a new basic pension and the count starts again at zero.

The current rate and the order that set it

Dearness relief is 60% of basic pension with effect from 1 January 2026, raised from 58% by Department of Pension and Pensioners’ Welfare Office Memorandum No. 42/02/2024-P&PW(D)/E-9475 dated 24 April 2026. Paragraph 6 of that order records that it issues in accordance with the Department of Expenditure’s Office Memorandum No. 1/1(i)/2026-E.II(B) dated 22 April 2026, which set the dearness allowance for serving employees at the same 60% from the same date. Paragraph 5 records that the order was issued in consultation with the Comptroller and Auditor General under Article 148(5) of the Constitution so far as it applies to the Indian Audit and Accounts Department.

The rate is revised twice a year, from 1 January and from 1 July, and it tracks the 12-month average of the All-India Consumer Price Index for Industrial Workers compiled by the Labour Bureau against a base index of 261.42. The derivation is identical to the dearness allowance calculation and is set out in full in the dearness allowance article; dearness relief adopts the result rather than computing its own.

Two orders, not one, are needed on each cycle. The Department of Expenditure order grants dearness allowance to serving employees and the Department of Pension and Pensioners’ Welfare order grants dearness relief to pensioners, and the second follows the first by a few days: 22 April and 24 April in the January 2026 cycle. A pensioner reading a news report of a dearness allowance increase can take the percentage as settled, but the money is authorised only when the pension order issues. The April 2026 revision reached about 68.27 lakh pensioners alongside 50.46 lakh serving employees, at a combined cost of Rs. 6,791.24 crore a year, per the Cabinet decision of 18 April 2026.

Who dearness relief is paid to

Paragraph 2 of Office Memorandum No. 42/02/2024-P&PW(D)/E-9475 dated 24 April 2026 lists seven categories that the 60% reaches. Central government civil pensioners and family pensioners are the largest. Armed forces pensioners and family pensioners are covered, as are civilian pensioners and family pensioners paid from Defence Service Estimates, railway pensioners and family pensioners, and All India Services pensioners and family pensioners. Persons drawing a provisional pension under Rule 62 of the CCS (Pension) Rules, 2021 draw dearness relief on it while the regular pension case is completed. So do central government employees absorbed in public sector undertakings and autonomous bodies whose full pension was restored after the 15-year commutation period, covered by Office Memorandum No. 4/34/2002-P&PW(D)Vol.II dated 23 June 2017.

The single order therefore does the work for the whole central pension population, and the administrative ministries circulate rather than re-decide it. The Railway Board issued the January 2026 order to railway pensioners as RBE No. 36/2026.

Two groups sit outside the main order and receive their own. Pensioners and family pensioners who continue to draw pension in the 5th Central Pay Commission pay scales are dealt with by separate orders, because their dearness relief runs on a different percentage series computed against the older index base. So are Contributory Provident Fund beneficiaries drawing a monthly ex-gratia rather than a pension, including employees who retired between 18 November 1960 and 31 December 1985 on the Group-wise ex-gratia of Rs. 3,000, Rs. 1,000, Rs. 750 and Rs. 650, and the widows and dependent children of CPF beneficiaries drawing Rs. 645 a month under Office Memorandum No. 1/10/2012-P&PW(E) dated 27 June 2013.

Calculating the amount in each case is the responsibility of the pension-disbursing authority, which for most pensioners is the branch of the authorised bank that credits the pension. The payment reaches the pensioner on the authority maintained by the Central Pension Accounting Office, and the banks act on the order without waiting for further instructions.

Working out the dearness relief on a pension

Dearness relief is the basic pension multiplied by 60%, the rate in force from 1 January 2026. Where the product leaves a fraction of a rupee, paragraph 3 of the order rounds it up to the next whole rupee, so a basic pension of Rs. 9,001 gives Rs. 5,400.60 of relief and Rs. 5,401 is paid. The rounding is always upward, never to the nearest rupee.

Rates in the table are the 60% fixed by DoPPW Office Memorandum No. 42/02/2024-P&PW(D)/E-9475 dated 24 April 2026, effective 1 January 2026. The minimum and maximum basic pension are the Rs. 9,000 and Rs. 1,25,000 set under the 7th Central Pay Commission structure.

Arrears arise on every cycle because the order issues months after the effective date. The 60% took effect on 1 January 2026 and was ordered on 24 April 2026, so a pensioner drawing a basic pension of Rs. 50,000 received three months of the 2% difference, Rs. 1,000 a month, as Rs. 3,000 of arrears alongside the revised monthly credit. No claim is needed: the disbursing bank computes and pays it.

Dearness relief on the full un-commuted pension

Dearness relief is calculated on the full basic pension originally sanctioned, not on the reduced pension a pensioner draws after commutation. Commutation of pension lets a pensioner exchange up to 40% of the basic pension for a lump sum and draw a reduced monthly pension for 15 years, and the reduction applies to the basic pension alone. The inflation adjustment continues to run on the whole figure for the entire commutation period.

The effect is worth setting out in rupees. A pensioner with a basic pension of Rs. 50,000 who commutes the full 40% receives a lump sum and then draws a reduced basic pension of Rs. 30,000. Dearness relief at 60% is worked out on Rs. 50,000 and comes to Rs. 30,000, so the monthly credit is Rs. 60,000. Had the relief been computed on the reduced Rs. 30,000 it would have been Rs. 18,000, and the pensioner would be Rs. 12,000 a month worse off at the current rate. That gap widens with every revision, because the relief runs on the larger base.

This is one of the two features that make commutation financially attractive, the other being restoration of the commuted pension after 15 years. Neither is discretionary and neither depends on the amount commuted.

Dearness relief on family pension

Dearness relief is paid on family pension at 60%, the same rate and the same 1 January and 1 July cycle as on a service pension. Family pension is granted under Rule 50 of the CCS (Pension) Rules, 2021 at 30% of last pay at the ordinary rate and 50% at the enhanced rate, and dearness relief is added to whichever rate is running.

The combined figure is not merely arithmetic: it is the threshold that several eligibility tests in Rule 50 are measured against. The minimum family pension of Rs. 9,000 a month plus dearness relief on it is Rs. 14,400 at 60%, and that is the income ceiling below which a childless widow keeps her family pension after remarriage under Rule 50(8)(b), and below which dependent parents qualify as dependent under Rule 50(10). A change in the dearness relief rate therefore moves those ceilings twice a year without any amendment to the rule.

At the upper end, an ordinary family pension at the ceiling of Rs. 75,000 a month draws Rs. 45,000 of dearness relief for Rs. 1,20,000 in all, and an enhanced family pension at its ceiling of Rs. 1,25,000 draws Rs. 75,000 for Rs. 2,00,000.

Dearness relief on the additional pension after 80

Dearness relief is paid on the additional pension granted in old age, on the enhanced basic figure rather than the original one. The order of 24 April 2026 states in terms that the 60% applies to basic pension and family pension including additional pension and additional family pension, so the two benefits compound rather than sitting side by side.

Rule 44(6) of the CCS (Pension) Rules, 2021 raises the basic pension by 20% on attaining 80 years, 30% at 85, 40% at 90, 50% at 95 and 100% at 100, running from the first day of the month in which the pensioner reaches the age. A pensioner with a basic pension of Rs. 50,000 who turns 80 moves to a basic pension of Rs. 60,000, and dearness relief at 60% rises from Rs. 30,000 to Rs. 36,000, taking the monthly credit from Rs. 80,000 to Rs. 96,000. The additional pension in old age article sets out the slabs; for a family pensioner the addition runs on the recipient’s own age, and dearness relief follows it the same way.

Re-employed pensioners and employed family pensioners

Dearness relief is not payable to a pensioner for the period of re-employment in government, and the bar is a rule rather than an administrative practice. Rule 52(2) of the CCS (Pension) Rules, 2021 provides that a pensioner re-employed under the Central Government or a State Government, or under a corporation, company, body or bank owned or controlled by them, in India or abroad, is not eligible to draw dearness relief on pension during that period. Permanent absorption and immediate absorption in such an organisation are covered on the same terms. The reason is that the person is by then drawing pay in the re-employed post with its own dearness allowance, and relief on the pension as well would be a second inflation adjustment on one income.

The proviso to Rule 52(2) restores the relief in one case, defined by three conditions that must all be satisfied. The pensioner must not have been holding a post classified as Group A before retirement. Pay in the re-employed post must have been fixed at the minimum of the scale or level of that post, and that minimum must be lower than the pre-retirement pay. The entire amount of pension sanctioned must have been ignored in fixing that pay, meaning no part of it was set off against the re-employed pay. A pensioner who satisfies only two of the three does not qualify.

Rule 52(3) puts the burden of proof on the pensioner. Dearness relief in the excepted case is drawn on a certificate from the employing department, corporation, company, body or bank confirming each of the three conditions, and the pension-disbursing bank is entitled to withhold the relief until it has that certificate. Rule 52 has been the source of these provisions since the 2021 rules replaced the corresponding Rule 55-A of the CCS (Pension) Rules, 1972, and every dearness relief order carries a paragraph directing that cases of re-employed pensioners and employed family pensioners be regulated under Rule 52 read with Office Memorandum No. 45/73/97-P&PW(G) dated 2 July 1999.

Family pensioners are exempt from the bar outright. Rule 52(4) provides that a person drawing family pension under Rule 50 continues to be eligible for dearness relief on that family pension while employed under the Central or a State Government or a corporation, company, body or bank under them. There are no conditions, no Group A distinction and no certificate: a widow employed in a government office draws her salary with its dearness allowance and her family pension with its dearness relief at the same time.

The pay side of re-employment is separate and is not affected by any of this. Dearness allowance in the re-employed post is drawn on the pay fixed in that post, exactly as for any serving employee, and the pay fixation on re-employment article sets out how that pay is fixed and how much of the pension is ignored.

The annual non-employment certificate

Dearness relief is conditional on an annual declaration, and missing it stops the relief alone. Paragraph 17.4 of the Central Pension Accounting Office scheme for payment of pensions through authorised banks requires a pensioner claiming dearness relief on pension or on compassionate allowance to furnish a certificate of non-employment, employment or re-employment, including permanent or immediate absorption, in the month of November each year, in the form at Annexure-XX. Where the pensioner declares employment carrying dearness allowance, the bank applies Rule 52. Where the certificate is not filed by the due date, the paragraph directs that the dearness relief element for December and afterwards may not be credited, while the pension itself continues to be credited. It is a different document from the annual life certificate, which falls due in the same month and whose absence stops the entire payment.

The 2020 freeze and the arrears that were not paid

Dearness relief was frozen at 17% for 18 months, from 1 January 2020 to 30 June 2021, by Department of Expenditure Office Memorandum No. 1/1/2020-E.II(B) dated 23 April 2020, which withheld three consecutive instalments of dearness allowance and dearness relief on grounds of the fiscal position during the pandemic. Pensioners continued to receive relief at the 17% already in force; what stopped was the increase.

Restoration came by an order of the same number dated 20 July 2021, which raised the rate to 28% with effect from 1 July 2021. The three withheld instalments were subsumed into that 28% prospectively, and the arrears for the 18 frozen months were not paid in cash. A pensioner drawing a basic pension of Rs. 50,000 through that period received relief at 17%, Rs. 8,500 a month, rather than the rate the index movement would have produced, and the difference was never recovered.

The episode is the clearest demonstration that the rate is set by executive order under Rule 52(1) rather than guaranteed by formula. The rule empowers the government to specify rates and conditions from time to time, and the index calculation is a policy method the government follows rather than a statutory entitlement to a particular percentage. The rate has been revised on every cycle since, reaching 60% from 1 January 2026.

Tax treatment

Dearness relief is taxable in full and carries no exemption of its own. It takes the character of the payment it is attached to, so the head of income and the deduction available both follow the pension rather than the relief.

A service pension, including its dearness relief, is chargeable under the head salaries, and the standard deduction available to a pensioner applies to the combined figure. A family pension, including its dearness relief, is chargeable as income from other sources, against the deduction in Section 57(iia) of the Income-tax Act, 1961. The income tax for government employees article sets out the slabs, the regimes and the deduction amounts for the current year.

The contrast with the commuted lump sum is the point worth holding. A commuted pension is exempt for a central government employee under Section 10(10A)(i) with no monetary ceiling, while the dearness relief on the residual pension is taxed month by month as it is received. Tax is deducted at source by the pension-disbursing bank on the combined monthly credit.

Dearness relief, dearness allowance and dearness pay compared

The three terms are distinct and only two of them are current. The table below sets out what each is computed on, who orders it and who receives it.

Dearness pay was dearness allowance equal to 50% of basic pay, merged with basic pay from 1 April 2004 under Department of Expenditure Office Memorandum F. No. 105/1/2004-IC dated 1 March 2004 and counted as pay for allowances, transfer grant, retirement benefits, contribution to the General Provident Fund, licence fee, the monthly CGHS contribution and advances. Its pensioner counterpart was dearness pension, dearness relief equal to 50% of pension merged with pension, which paragraph 3 of the same order confined to those who had retired up to 31 March 2004. No dearness pay provision exists under the 7th CPC structure, and neither dearness allowance nor dearness relief is merged into pay or pension between pay commissions.

Dearness relief at a pay commission revision

Dearness relief resets to zero at a pay commission revision, because the accumulated relief is merged into the revised basic pension. On 1 January 2016 the 7th Central Pay Commission absorbed the 125% then in force into the revised pay and pension through the 2.57 fitment factor, and the rate began again from zero. It has climbed to 60% over the decade since.

The 8th Central Pay Commission will produce the same mechanism when its recommendations are implemented: the dearness relief in force on the effective date is expected to be absorbed into a revised pension and the count restarted. The Commission’s terms of reference were notified on 3 November 2025 and it has 18 months to report, so no revised pension figure, fitment factor or reset date exists yet. Any specific number attributed to the 8th CPC is a projection until the Commission reports and the government issues the implementing order.

Until then, dearness relief is 60% of basic pension, in force from 1 January 2026, revised on 1 January and 1 July, paid on the full un-commuted pension and on family pension. The central government pension article covers the wider retirement framework, and the Rule 44 pension calculator works out the monthly figure including dearness relief.

Related Articles

• Additional pension in old age
• Fixed Medical Allowance
• Restoration of commuted pension
• Dearness allowance
• All-India Consumer Price Index for Industrial Workers
• Central government pension
• Commutation of pension
• Family pension
• Provisional pension
• Pay fixation on re-employment
• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• Gratuity for central government employees
• Fitment factor
• Income tax for government employees
• 7th Central Pay Commission
• 8th Central Pay Commission
• Central government employees in India
• House rent allowance
• Transport allowance
• Take-home salary of central government employees
• Department of Expenditure
• Department of Personnel and Training
• Rule 44 pension calculator
• Commutation of pension calculator
• Family pension calculator
• 7th CPC salary calculator

External references

• Department of Pension and Pensioners’ Welfare
• Central Pension Accounting Office
• Department of Expenditure, Ministry of Finance
• Department of Expenditure: orders and circulars
• Labour Bureau: Consumer Price Index
• Pensioners’ Portal

References

1. Central Civil Services (Pension) Rules, 2021, notified as G.S.R. 868(E) on 20 December 2021. Rule 52 grants dearness relief and regulates it for re-employed pensioners and employed family pensioners; Rule 44(6) grants the additional pension in old age; Rule 50 grants family pension; Rule 62 provides for provisional pension.
2. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 42/02/2024-P&PW(D)/E-9475, dated 24 April 2026, raising dearness relief from 58% to 60% of basic pension and family pension with effect from 1 January 2026.
3. Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1(i)/2026-E.II(B), dated 22 April 2026, setting dearness allowance at 60% of basic pay with effect from 1 January 2026, the rate that dearness relief mirrors.
4. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 45/73/97-P&PW(G), dated 2 July 1999, on the conditions for dearness relief to re-employed pensioners and employed family pensioners.
5. Ministry of Finance, Department of Expenditure, Office Memorandum No. 1/1/2020-E.II(B), dated 23 April 2020, freezing dearness allowance and dearness relief at 17%, and the Office Memorandum of the same number dated 20 July 2021, restoring the rate at 28% with effect from 1 July 2021.
6. Department of Pension and Pensioners’ Welfare, Office Memorandum No. 4/34/2002-P&PW(D)Vol.II, dated 23 June 2017, on the restoration of full pension to absorbee pensioners after the commutation period.
7. Income-tax Act, 1961, Section 10(10A)(i) on the exemption of commuted pension and Section 57(iia) on the deduction against family pension.