One of the most eagerly awaited events for more than 50 lakh central government workers and 65 lakh Indian retirees is the 8th Pay Commission (8th CPC). The commission was established in January 2025 with the intention of updating the pay scale to reflect the state of the economy.
Although the official implementation of the 8th PC recommendations, including the actual payment of increased salaries, is anticipated to begin on January 1, 2026, it may take longer, possibly until mid-2027 or early 2028. Importantly, since the new pay scale is likely to be implemented retroactively starting January 1, 2026, employees are expected to receive arrears.
The Reason for the Delay: Why Hasn’t the Commission Been Established Yet?
The government has yet to reveal the chairperson, members, and Terms of Reference (ToR) of the 8th Pay Commission, even though the Union Cabinet approved its creation on January 16, 2025. A number of intricate administrative procedures are to blame for this delay. According to senior government advisor Sanjeev Sanyal, the government is conducting a thorough mapping exercise to better understand its structure, which is a major factor in the delay. To determine which departments are operational, how many employees each department has, and which older departments require mergers or closures, the central government is performing computations and inspections.
The Restructuring Process
- Departmental Mergers: The first step in this restructuring process is departmental mergers, which combine departments whose work overlaps or where workloads have decreased due to digitalization.
- Staff Rationalization: Relocating workers from overstaffed older departments to more critical, modern fields that require more staff, like cybersecurity.
According to government experts, it would be pointless to establish new pay structures before the merger or closure of these departments. It is projected that the entire mapping and restructuring process will be finished by December 2025. Following the completion of this process, the 8th Pay Commission procedures are anticipated to start.
Historical Development of Central Pay Commission
Interpreting the Projected Hike and Fit Factor
The fitment factor, which is the multiplier used to calculate the new basic salary by multiplying it by the employee’s current basic pay, is the most important part of any pay commission.
| Category | Range/Estimate |
| Expected Range | 1.83 to 2.46 |
| Widely Speculated Factor | 1.96 |
| Brokerage Firm (Kotak) Estimate | 1.8x |
These estimates suggest that the 8th Pay Commission will raise central government employees’ salaries significantly, possibly by 30–34%. The average real salary increase, according to Kotak Institutional Equities, may be closer to 13%.
Impact on Minimum Basic Pay
The minimum basic salary for an employee under the 7th Pay Commission is Rs 18,000. Applying the speculated fitment factors:
- If the factor is 1.8x, the minimum basic pay could rise to Rs 30,000 per month.
- If the factor is 1.96, the minimum basic pay could rise to Rs 35,280 (Rs 18,000 x 1.96).
This anticipated increase suggests that the minimum basic salary could nearly double.
Pay Bands, Allowances, and Salary Structure
The overall salary structure will be revised by the 8th Pay Commission. The total of the updated Basic Pay and recalculated allowances will be the gross salary.
Allowance for Dearness (DA) Restart
The Dearness Allowance (DA) is a crucial part of the new structure. The DA component, which is currently 55% of basic pay, will be merged into the updated basic pay or reset to zero upon the implementation of the 8th Pay Commission. After that, new DA calculations based on the revised basic pay will start. The revised basic salary will be significantly higher thanks to this adjustment, which also resets the DA.
The new, updated basic pay will be used to recalculate allowances like House Rent Allowance (HRA) and Travel Allowance (TA).
Potential Changes to Base Pay at Every Level
Using the projected fitment factor range of 1.83 (Low End) to 2.46 (High End), the following table displays the expected basic salary ranges (Pay Bands) across different Pay Matrix Levels.
| Pay Matrix Level | 7th CPC Basic Salary (Rs) | 8th CPC Basic Salary (Low End – 1.83) (Rs) | 8th CPC Basic Salary (High End – 2.46) (Rs) |
| Level 1 | 18,000 | 32,940 | 44,280 |
| Level 2 | 19,900 | 36,417 | 48,974 |
| Level 3 | 21,700 | 39,711 | 53,466 |
| Level 4 | 25,500 | 46,665 | 62,850 |
| Level 5 | 29,200 | 53,416 | 71,923 |
| Level 6 | 35,400 | 64,872 | 87,084 |
| Level 7 | 44,900 | 82,207 | 110,554 |
| Level 8 | 47,600 | 87,168 | 117,177 |
| Level 9 | 53,100 | 97,059 | 130,386 |
| Level 10 | 56,100 | 102,423 | 137,826 |
| Level 11 | 67,700 | 123,381 | 166,452 |
| Level 12 | 78,800 | 144,144 | 193,728 |
| Level 13 | 1,23,100 | 225,473 | 302,226 |
| Level 13A | 1,31,100 | 240,513 | 322,311 |
| Level 14 | 1,44,200 | 263,886 | 354,172 |
| Level 15 | 1,82,200 | 333,426 | 448,713 |
| Level 16 | 2,05,400 | 375,882 | 505,584 |
| Level 17 | 2,25,000 | 411,750 | 553,500 |
| Level 18 | 2,50,000 | 457,500 | 615,000 |
An Illustration of a Possible In-Hand Salary Increase
Assuming a fitment ratio of 1.96 for an employee now at Pay Matrix Level 9 earning a base salary of Rs 53,100:
- Rs 1,04,076 is the new basic pay (Rs 53,100 × 1.96).
- Total Estimated Salary (Gross): Rs 1,32,177 (assuming DA is first reset to 0% and HRA is at 27% of new basic salary).
In comparison to the present total compensation under the 7th CPC, this example indicates a projected monthly rise of about Rs 33,942, exclusive of New IT Deduction Rates.
Importance for Pensioners and Government Workers
The importance of the 8th Pay Commission is enormous, especially in light of the growing costs and inflation. Among the principal beneficiaries are:
- Workers in the Central Government: Significant pay increases for more than 50 lakh workers will be implemented in an effort to improve compensation and bring wages into line with the state of the economy.
- Pensioners: Approximately 65 lakh pensioners will also be impacted. The fitment factor and the new pay structure will be used to update their pensions. For instance, the minimum basic pension could increase from Rs 9,000 to Rs 17,280 if the fitment factor was 1.92.
Future Perspectives and Upcoming Actions
To speed up the process of forming the 8th PC, the administration has declared that it is actively consulting important parties, such as state governments and different ministries. The Terms of Reference and the panel members are anticipated to be formally informed upon completion of the internal government mapping and restructuring, which is anticipated to occur by December 2025. The commission will draft its final report after the appointment, and it might be completed by the end of 2026 or the beginning of 2027.
Conclusion
A major financial overhaul for more than 50 lakh central government employees and up to 65 lakh pensioners is anticipated as a result of the 8th Pay Commission. The recommendations are officially anticipated to be put into effect on January 1, 2026, even though the formation is still pending. The new structure will be applied retroactively, guaranteeing that arrears are paid, even if the final payout is delayed until 2027 or 2028. Based on a fitment factor that is anticipated to range from 1.83 to 2.46, the salary increase is estimated to be between 30 and 34%. Using the estimated 1.96 factor, this factor could increase the minimum basic salary (currently Rs 18,000) to about Rs 35,280. The goal of this revision is to bring compensation into line with the state of the economy.