8th Pay Commission: The much-awaited 8th Pay Commission is finally in motion, and it has sparked widespread discussion among over 50 lakh central government employees and 65 lakh pensioners.

With questions flooding social media, many are wondering: When will salaries increase? How much will the hike be? Will pensions rise? The government has now clarified key points, cutting through the confusion.

8th Pay Commission Formed

On November 3, 2025, the government officially notified the formation of the 8th Pay Commission, along with its terms of reference. The commission has already started functioning, with its chairman and members formally appointed.

Its mandate includes reviewing all aspects of pay, allowances, and pensions for central employees and pensioners. The government has also clarified that pension revision is part of the commission’s scope, addressing earlier concerns among employees and unions that pensions might be excluded.

A major topic of discussion has been the potential merger of Dearness Allowance (DA) and Dearness Relief (DR) into basic pay. The government has clearly stated that there is no proposal to merge DA with basic salary, even though the DA has crossed 50 per cent.

Employees will continue to receive DA and DR separately, with DA applicable to employees and DR to pensioners.

Both DA and DR are calculated based on the AICPI index and are revised every six months to account for inflation. Currently, the DA/DR rate stands at 55 per cent, and it will continue to be adjusted periodically.

This ensures that employees and pensioners receive fair compensation to offset rising prices, without affecting the basic salary structure.

Financial experts anticipate that the fitment factor recommended by the 8th Pay Commission may be similar to the 7th Pay Commission. Estimates suggest that basic pay could rise by 30–34 per cent, potentially increasing the minimum salary from Rs 18,000 to approximately Rs 30,000–Rs 32,000.

Combined with revised allowances and pensions, this adjustment is expected to directly benefit millions of central employees and pensioners.

The government has also clarified the terms of reference (ToR) to ensure pension revisions are included, reassuring around 70 lakh pensioners. However, salary hikes will not be immediate.

Employees should not expect increased pay to reflect in January 2026 salaries. The final implementation will depend on the commission’s recommendations, government approvals, and fitment calculations. Once finalised, arrear payments will be made retroactively for the period covered by the pay revision.