NEW DELHI, December 28 — The Union Cabinet, led by Prime Minister Narendra Modi, has approved the 8th Pay Commission, effective from January 1, 2026. For the first time in ten years, the commission will update central government workers’ and retirees’ pay, benefits, and pensions.
What is the 8th Pay Commission’s effective date?
The 8th Pay Commission is officially set to take effect from January 1, 2026. The commission’s mandate is to evaluate and revise the pay structure, pensions, and allowances for nearly 50 lakh central government employees—including defence personnel—and approximately 65 lakh pensioners. These reviews are constitutionally mandated to occur once every ten years to align compensation with economic conditions.
How much will salaries increase?
While the government has not officially announced the percentage of salary hikes, early media reports project a significant increase based on the fitment factor. According to reports, the 7th wage Commission structure could increase the minimum basic wage from the existing ₹18,000 to ₹51,480. The exact increase will be finalized and announced by the government following the commission’s detailed recommendations.
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Will dearness allowance (DA) and pensions be affected?
The 8th Pay Commission will revise the formula for calculating Dearness Allowance to better factor in inflation. Importantly, the government has clarified that pensioners will continue to receive DA hikes. On December 13, 2025, official sources labeled as “Fake” a claim that the new Finance Act 2025 would stop DA hikes for pensioners. They stated post-retirement benefits are only forfeited if an employee is “dismissed for misconduct,” as per amended Rule 37 of the CCS (Pension) Rules, 2021.
What is the fitment factor?
The fitting factor acts as a crucial multiplier in reshaping the present basic pay into an updated structure. It factors in real wage movements, inflation, and budget limitations.
- Early expert projections suggest the 8th Pay Commission’s fitment factor could range between 1.83 and 2.57.
- The previous 7th Pay Commission used a fitment factor of 2.57.
- Tax expert CA Chandni Anandan noted the final figure will balance economic inflation with the government’s fiscal sustainability goals.
What are the key goals of this commission?
The commission intends to make long-term adjustments to public finances following ten years of unchanged policy. It targets inflation concerns, real wage erosion, and adherence to the government’s pay philosophy. The goal is to provide equitable compensation to existing employees and retirees.