The Central Government approved the formation of the 8th Pay Commission earlier this year, setting the stage for major changes in employee salaries and benefits. As the timeline for the 7th Pay Commission ends on December 31, 2025, the new commission is set to take effect from January 1, 2026. However, final recommendations might take time, and full implementation could be delayed until 2027.
Panel Formation Likely in May
The wait for central government employees could soon be over. Sources suggest that the panel for the 8th Pay Commission may officially be formed in early May. While the government gave an initial nod in January, formal constitution of the panel is expected next month.
Implementation Timeline
Although the 7th Pay Commission ends this year, the process of drafting and finalizing the 8th Pay Commission’s report could take about 15 to 18 months. As a result, while the new pay scale is scheduled from January 2026, real implementation could stretch into 2027.
Big Question: Will Existing DA Merge with Basic Pay?
One of the most talked-about issues is whether the current Dearness Allowance (DA) will be merged into the basic salary. Merging DA into the basic pay would significantly boost base salaries and impact future increments.
Possible Overhaul in DA Calculation
Another major change under consideration is the method of calculating Dearness Allowance. Sources indicate the government might revise the base year used to calculate DA, leading to a complete reset in the formula.
- Current DA Calculation: Based on the AICPI-IW index with 2016 as the base year.
- Reason for Change: Given the sharp rise in inflation over the past decade, the 2016 base year is now seen as outdated.
- Proposed New Base Year: Likely to shift to 2026 when the new commission is implemented.
What Happens If the Base Year Changes?
If the base year changes:
- The existing DA will reset to zero.
- A new calculation for DA will begin using the updated base year data.
- Speculations suggest that by January 2026, the DA could reach 61%, and this amount might be merged into the new basic salary.
Past Example: What Happened in 2016?
When the 7th Pay Commission was implemented:
- 125% DA was merged into the new basic pay.
- The grade pay system from the 6th Pay Commission was abolished.
- A new pay matrix was introduced, simplifying salary structures and promotions.
Similarly, the 8th Pay Commission could introduce a revised pay matrix along with new mechanisms for promotions and increments.
What’s Next?
As of now, all developments are based on internal discussions and media reports. The final picture will become clear only after the 8th Pay Commission panel submits its report — expected sometime around April-May 2026.
Key Points to Watch:
- Will DA merge with the basic salary?
- Will there be a new formula for calculating DA?
- How much salary hike can employees expect?
Stay tuned for every update related to the 8th Pay Commission — from salary hikes to changes in allowances — as the government prepares to reshape pay structures for millions of its employees.
