8th Pay Commission Formed: Salary Hike for Peons to Officers Explained, Know How Much Will Come Into Your Account

New Delhi, October 28 (Udaipur Kiran): The Modi government has officially constituted the 8th Pay Commission, which will recommend revisions to pay structures and allowances for over 50 lakh central government employees and around 69 lakh pensioners. The biggest question now is — how much will salaries actually increase, and what will employees receive in hand?

The increase in basic pay will depend on the fitment factor and dearness allowance (DA) adjustment — two crucial components that determine the overall salary revision.

Commission Formed Under Former Supreme Court Judge Ranjana Prakash Desai
Following Tuesday’s cabinet meeting chaired by Prime Minister Narendra Modi, Information and Broadcasting Minister Ashwini Vaishnaw announced the formation of the commission and approval of its terms of reference.

The panel will be chaired by Justice (Retd.) Ranjana Prakash Desai, with Prof. Pulak Ghosh of IIM Bangalore appointed as part-time member and Pankaj Jain, Secretary, Ministry of Petroleum and Natural Gas, serving as member-secretary.

The commission has been directed to submit its report within 18 months, though it may submit an interim report if required.

Report Expected by 2026, Recommendations Likely Effective from January 1, 2026
According to the official statement, the panel will take into account the country’s economic conditions and fiscal discipline while preparing its recommendations. The aim is to ensure that sufficient resources remain available for development and welfare programmes.

If the pattern of previous commissions continues, the 8th Pay Commission’s recommendations are likely to be implemented from January 1, 2026, a decade after the 7th Pay Commission’s recommendations came into effect on January 1, 2016.

Pension Reforms Also Under Review
The commission has also been tasked with suggesting reforms for non-contributory pension schemes and examining the financial impact on states, as most state governments revise their employees’ pay scales based on central recommendations.

Salary Hike Depends on Fitment Factor
Under the 7th Pay Commission, the fitment factor was fixed at 2.57. The magnitude of the salary hike this time will depend on how much higher this factor is set by the new commission.

It’s important to note that after every new pay commission, the DA is reset to zero, as inflation adjustments are already built into the revised basic pay. Currently, DA stands at 55% of the basic pay. Once reset, the total salary (basic + DA + HRA) may initially appear slightly lower since the DA component will temporarily disappear.

Example: How the 8th Pay Commission Could Change Your Salary
Let’s assume an employee is at Level-5 under the 7th Pay Commission:

• Current Basic Pay: ₹29,200

• DA (55%): ₹16,060

• HRA (27% in metro cities): ₹7,884

• Total Salary (Now): ₹53,144

If the fitment factor is set at 2.0, the revised salary would be:

• New Basic Pay: ₹29,200 × 2 = ₹58,400

• DA: 0% (reset after implementation)

• HRA (27%): ₹15,768

• Total Salary (After Revision): ₹74,168

This formula can help estimate potential salary increases for employees across all grades — from lower-level staff to senior officers.