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Centre clarifies dress allowance rules: new recruits and retirees after July 30, get proportionate payment in July; excess paid to retirees from October 2025 will be recovered.
Dress allowance, credited annually with the July salary, increases by 25% every time Dearness Allowance (DA) rises by 50%.
The central government has issued a fresh clarification on the payment and recovery of dress allowance for its employees, stating that both new recruits and officials retiring after July 30, 2025, will receive their proportionate allowance in the July 2025 salary itself. However, those retiring from October 2025 onwards will face recovery of any excess proportionate payment already made.
Dress allowance, credited annually with the July salary, increases by 25% every time Dearness Allowance (DA) rises by 50%. For the current year, the allowance has already been disbursed to all eligible employees.
In a circular dated September 24, 2025, the government said:
“With respect to the dress allowance to the officials retiring after July, 2025, it was mentioned in the aforesaid OM dated 16.06.2025 that a clarification was being sought from MoF and till the receipt of such clarification the prevalent instructions dated 05.03.2020 would continue to be followed in their cases.
Now, the MoF vide L.D. No. 19051/2/2025-E.IV Department of Expenditure, dated 16.09.2025 has advised that the payment of Dress Allowance to officials retiring in the middle of the year may also be regulated on a proportionate basis, in the same manner as prescribed for new joinees under this Department’s OM dated 24.03.2025, so as to maintain consistency and uniformity.”
Clarifications on Payment and Recovery
The circular clarified that dress allowance for 2025 has already been credited along with the July salary, either at full or half the rate, depending on the employee’s retirement date.
Following the fresh instructions from the Department of Expenditure (DoE), the government has decided to supersede previous orders dated March 5, 2020, and June 16, 2025. The key points are:
Officials retiring mid-year will be paid a proportionate dress allowance effective from June 2025.
Recovery of the excess proportionate amount will be made from employees retiring in or after October 2025.
No recovery will be made from those who have already retired or are due to retire on or before September 30, 2025.
Provision for Newly Recruited Employees
On the issue of newly appointed officials, the government noted that in some offices, dress allowance for the last year was not included in the July 2025 pay of those who joined after July 2024.
Reiterating the rule, the circular stated that all new recruits who joined between July 2024 and June 2025 are entitled to dress allowance as per the instructions issued on June 16, 2025.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
October 05, 2025, 14:36 IST
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