8th Pay Commission gets Central Cabinet approval: What it means and its impact on salaries, benefits

The Union Cabinet has approved the Terms of Reference for the 8th Central Pay Commission, paving the way for a major salary revision for Central government employees and pensioners.

8th Pay Commission: Central employees are likely to get salary hike after the Pay Commission recommendations are implemented (Representative image).

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the Terms of Reference (ToR) for the 8th Central Pay Commission. The Commission will review the pay structure and service conditions of Central government employees. The move will bring salary benefits oto lakhs of central government employees as well as pensioners.

What will be the impact of the 8th Pay Commission’s salary revisions?

The commission will be led by former Supreme Court Judge Ranjana Prakash Desai. Also, on the panel will be one part-time member and one member-secretary.

There is no official declaration of the salary hikes. However, the salary changes will be based on a combination of factors, such as existing grade pay, basic salary, HRA, and fitment factor.

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The fitment factor is a multiplier applied to the basic pay of an employee. It is expected to be between 1.83 and 2.46 under the 8th Pay Commission revisions.

The Dearness Allowance is also likely to be hiked.

What is the 8th Pay Commission salary calculation formula?

As per financial planning and tax filing services website, the formula for the the 8th Pay Commission is likely to adhere to the following equation:
New Gross Salary = (Current Basic Pay x Fitment Factor) + DA + HRA Class

When will the 8th Pay Commission changes be implemented?

The Commission will be a temporary body comprising a Chairperson, one part-time member, and a member-secretary. It has been tasked to submit its recommendations within 18 months of its constitution, with the option to present interim reports if needed.

While framing its proposals, the Commission will consider the country’s economic conditions, the need for fiscal prudence, and the availability of resources for welfare and development expenditure. It will also assess the financial implications for State governments and compare pay structures with those in Central Public Sector Undertakings and the private sector.

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The 8th Central Pay Commission was first announced in January 2025. Pay Commissions are typically constituted every ten years, and the implementation of the 8th CPC’s recommendations is expected to take effect from January 1, 2026.