Dearness Allowance is calculated using a formula linked to the Consumer Price Index (CPI), which reflects inflation trends in the economy. The government revises Dearness Allowance twice a year to ensure salaries align with current living costs. The percentage of Dearness Allowance increases as inflation rises, directly benefiting employees and pensioners. This allowance is added to the basic salary, impacting overall earnings. Understanding the calculation of Dearness Allowance helps individuals anticipate salary changes and manage their expenses better, especially during periods of economic uncertainty and rising prices.