Hello Seniors,
I would like to know the difference between DA and VDA. Also, what is the criteria to pay VDA? Can we include VDA in the gross salary or do we need to pay it separately? Are these two different? Kindly brief me on the same. I need to work on this urgently, so please suggest me on the same.
Regards,
Sreedevi
From India, Hyderabad
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I would like to know the difference between DA and VDA. Also, what is the criteria to pay VDA? Can we include VDA in the gross salary or do we need to pay it separately? Are these two different? Kindly brief me on the same. I need to work on this urgently, so please suggest me on the same.
Regards,
Sreedevi
From India, Hyderabad
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Dear Sridevi,
In Wage and Salary Administration, the sum total of the consideration, both in cash and kind, payable by the employer to his employees for the services rendered by them can be broken into different components such as basic and other allowances either suo motu by the employer or through collective bargaining. Since the monetary value of the entire consideration is called gross wages/salary, basing on which the employer has to pay certain regular and occasional amounts under certain statutory heads like contributions to EPF, ESI, Bonus, Leave Salary, Gratuity, etc., which are called as indirect commitments. Dictated by the tendencies of thrift and prudence, employers always prefer to reduce the CTC by adopting salary break-up, and the employees also accept it on account of the rise in their take-home salary and tax benefits. So, dearness allowance is one among such components of wage/salary structure.
The concept of dearness allowance or D.A for short came into practice in India during World War-II to offset the sudden and exorbitant raise in prices and remained a regular practice to counter the inflationary effects upon the wages/salary of the working classes both in industrial and other sectors. D.A or V.D.A or Dearness Pay are basically one and the same but different in terms of the basis of calculation and cycle of implementation. Despite the method of calculation and the periodicity of its revision, it forms part of the gross salary. When it is shown as a distinct component, it will reduce the burden of the indirect commitment to some extent like in the case of payment of gratuity. As far as I know, there is no legal compulsion to pay it separately.
When the quantum of D.A and its periodicity of revision is determined either on the basis of prevailing general price levels or linked to any Consumer Price Index, it is called Variable Dearness Allowance.
From India, Salem
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6185In Wage and Salary Administration, the sum total of the consideration, both in cash and kind, payable by the employer to his employees for the services rendered by them can be broken into different components such as basic and other allowances either suo motu by the employer or through collective bargaining. Since the monetary value of the entire consideration is called gross wages/salary, basing on which the employer has to pay certain regular and occasional amounts under certain statutory heads like contributions to EPF, ESI, Bonus, Leave Salary, Gratuity, etc., which are called as indirect commitments. Dictated by the tendencies of thrift and prudence, employers always prefer to reduce the CTC by adopting salary break-up, and the employees also accept it on account of the rise in their take-home salary and tax benefits. So, dearness allowance is one among such components of wage/salary structure.
The concept of dearness allowance or D.A for short came into practice in India during World War-II to offset the sudden and exorbitant raise in prices and remained a regular practice to counter the inflationary effects upon the wages/salary of the working classes both in industrial and other sectors. D.A or V.D.A or Dearness Pay are basically one and the same but different in terms of the basis of calculation and cycle of implementation. Despite the method of calculation and the periodicity of its revision, it forms part of the gross salary. When it is shown as a distinct component, it will reduce the burden of the indirect commitment to some extent like in the case of payment of gratuity. As far as I know, there is no legal compulsion to pay it separately.
When the quantum of D.A and its periodicity of revision is determined either on the basis of prevailing general price levels or linked to any Consumer Price Index, it is called Variable Dearness Allowance.
From India, Salem
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In the payment of Dearness Allowance, is the Company liable to pay both Fixed DA and Variable DA?
From India, Madgaon
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From India, Madgaon
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Dear Sridevi,
Originally, the term Dearness Allowance depicts a variable allowance given to adjust against the cost of living (inflation). In India, it is linked with the All India Consumer Price Index (AICPI). The AICPI derives the index from a basket of food, clothing, fuel, and other essentials/commodities required for a family. For government employees, the DA is revised quarterly or semi-annually as an average of monthly DA. Therefore, this DA is referred to as Variable DA (VDA) but commonly known as DA.
Certain organizations may have both DA and VDA as components of their compensation/CTC. In this case, the DA is likely to be the Fixed DA. During wage revisions (e.g., 7th Pay commissions), the current VDA may be converted into the Fixed DA, and new VDA is initiated afresh or as per decided formulas. Hence, there could be both components, i.e., DA (FDA) and VDA.
Regards,
Shailesh Parikh
From India, Mumbai
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Originally, the term Dearness Allowance depicts a variable allowance given to adjust against the cost of living (inflation). In India, it is linked with the All India Consumer Price Index (AICPI). The AICPI derives the index from a basket of food, clothing, fuel, and other essentials/commodities required for a family. For government employees, the DA is revised quarterly or semi-annually as an average of monthly DA. Therefore, this DA is referred to as Variable DA (VDA) but commonly known as DA.
Certain organizations may have both DA and VDA as components of their compensation/CTC. In this case, the DA is likely to be the Fixed DA. During wage revisions (e.g., 7th Pay commissions), the current VDA may be converted into the Fixed DA, and new VDA is initiated afresh or as per decided formulas. Hence, there could be both components, i.e., DA (FDA) and VDA.
Regards,
Shailesh Parikh
From India, Mumbai
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