Winning Bizness Desk
Mumbai.The Union Cabinet on Tuesday, October 28, approved the Terms of Reference (ToR) for the 8th Central Pay Commission. Announcing the decision during a cabinet briefing, Union Railways and IT Minister Ashwini Vaishnaw said the Commission will now be formally constituted and is expected to submit its report within 18 months from the date of formation. Based on this timeline, the revised pay structure could come into effect from January 1, 2026. However, if the past trend is any indication, it may take until 2028 for the full implementation. Once applied, the new pay scale will benefit nearly 50 lakh central government employees and 69 lakh pensioners across the country.
Understanding how salary revision will be calculated
The salary increase under the 8th Pay Commission will depend mainly on two factors: the fitment factor and the merger of Dearness Allowance (DA). In the 7th Pay Commission, the fitment factor was 2.57. For the 8th Commission, it is expected to be around 2.46. Each new pay cycle resets the DA to zero, since the revised basic pay already includes inflation adjustments. Currently, DA stands at 55 percent of the basic salary, which means that once it resets, the total salary may appear slightly lower at first glance before the DA starts accumulating again over time.
Sample salary structure for Level 6 employee
To understand the new pay calculation, consider an employee at Level 6 under the 7th Pay Commission. At present, the basic pay is ₹35,400, with 55 percent DA amounting to ₹19,470 and House Rent Allowance (HRA) of 27 percent, which equals ₹9,558. This brings the total monthly salary to ₹64,428. Under the 8th Pay Commission with a fitment factor of 2.46, the new basic pay would rise to ₹87,084. With DA reset to zero and HRA recalculated at ₹23,513, the total salary will reach ₹1,10,597.
What is the fitment factor and why it matters
The fitment factor is a multiplier used to revise the basic salary. It reflects how much the cost of living and inflation have changed over the years. Every Pay Commission uses this factor to determine the new salary structure that ensures a fair increase while maintaining government expenditure balance. A small change in the fitment factor can significantly alter salary scales across different employee levels.
A look at previous Pay Commissions
The Fifth Pay Commission was set up in April 1994 and its recommendations were implemented from January 1996. It reduced the number of pay scales from 51 to 34. The Sixth Pay Commission was formed in October 2006, submitted its report in March 2008, and was implemented retrospectively from January 2006.
Notably, the Seventh Pay Commission was announced in February 2014, its report submitted in November 2015, and recommendations came into effect from January 2016. Following this ten-year cycle, the 8th Pay Commission is expected to bring its changes from January 2026.Justice Ranjana Prakash Desai to head the Commission
The upcoming 8th Central Pay Commission will be a temporary body with a chairperson, one part-time member, and one member-secretary. The commission will be headed by former Supreme Court judge Justice Ranjana Prakash Desai. It will examine pay structures, pensions, and other service conditions of central government employees. The body may also issue interim reports on specific issues if required, before submitting its final recommendations.
In a nutshell:
- Centre approves Terms of Reference for 8th Pay Commission
- Report to be submitted within 18 months of formation
- Implementation likely from January 1, 2026
- Nearly 1.2 crore employees and pensioners to benefit
- Fitment factor expected to be 2.46, DA reset to zero
- Commission to be chaired by Justice Ranjana Prakash Desai
- Full implementation may take until 2028 depending on process
