The 8th Pay Commission is generating considerable anticipation among central government employees and pensioners in India. Approved by the Union Cabinet on January 16, 2025, the commission is expected to bring revised salary structures, allowances, and pension benefits. While the official notification is awaited, the commission's recommendations are projected to take effect from January 1, 2026, potentially benefiting approximately 50 lakh government employees and 65 lakh pensioners.

Implementation Timeline

Although the 8th Pay Commission has been approved, the government is yet to finalize the chairperson, members, and the Terms of Reference (ToR). The ToR is a crucial document that outlines the panel's scope of work, including pay structures, allowances, and retirement benefits. Without it, the commission cannot begin its work, making an early salary revision unlikely.

Historically, Pay Commissions take around 18-24 months to complete their work, followed by another 6-12 months for government review and approval. For instance, the 7th Pay Commission was constituted in February 2014, submitted its report in November 2015, and the revised pay scales came into effect in January 2016. Following similar timelines, the 8th Pay Commission, if it commences operations in early 2026, may submit its final report by late 2026 or early 2027, with the revised salary structure potentially being implemented by mid-2027 or early 2028.

Expected Salary Hike

The primary focus of the 8th Pay Commission is to revise the basic pay, allowances, and pension benefits of central government employees. A key element in determining the new pay structure is the fitment factor, which serves as a multiplier on the existing basic pay. While the 7th Pay Commission had a fitment factor of 2.57, speculations for the 8th Pay Commission range from 1.83 to 2.86, depending on fiscal constraints and government considerations. Some analysts anticipate the factor to be between 2.5 and 2.8 to balance a generous increase with budgetary realism.

Based on projected fitment factors and inflation trends, salary increases are expected to be in the range of 30% to 34%. For lower pay levels, the increase could even exceed 40%. For example, a current minimum basic pay of ₹18,000 might increase to between ₹40,000 and ₹51,480. It's also been suggested that the minimum basic pay may increase from ₹18,000 to around ₹26,000 per month.

Dearness Allowance (DA)

There are expectations that the Dearness Allowance (DA) will be merged into the basic salary. As of October 2025, the DA stands at 58% of the basic pay. While some anticipate that the entire DA will be merged into the new basic pay, experts suggest that only 50% of it might be merged before resetting it to zero. The inflation index for DA calculations will restart based on 2026 prices, reflecting modern spending habits.

Pension Revisions

The 8th Pay Commission is expected to extend benefits to pensioners as well. The minimum pension, which was set at ₹9,000 under the 7th Pay Commission, is also expected to increase significantly. With a projected fitment factor of 2.86, pensions could rise substantially, providing retirees with improved financial security. It is expected that the 8th Pay Commission will offer an average pension hike of 20% to 30%, based on past trends.

While the implementation of the 8th Pay Commission is eagerly awaited, central government employees and pensioners should remain informed about the official announcements and notifications from the government.