8th Pay Commission Update: Significant Salary And Pension Hikes Expected In 2026

News of the 8th Pay Commission: The path to a substantial pay increase to the greater number of close to 1.1 crore central government workers and pensioners has officially been outed as the 8th Pay Commission takes off this January 2026. Although the new pay scales are set to be retroactive as of January 1, 2026, new inflation rates (AICPI-IW) have already led to a new increase in Dearness Allowance (DA) which is estimated to go up at least 60 percent.

Even though the official adoption of the guidelines provided by the Commission can take approximately 18 months, the workers will experience tremendous financial rewards on the form of accrued arrears after the final report has been passed.

Dearness allowance (DA) in Central Government employees

An important change is brought out on the Dearness Allowance (DA) of the central employees. This had been increasing at a rate of 0.5 in November touching an index of 148.2 on Consumer Price Index of industrial workers (AICPI-IW). This will be the 5th increase in the index in the past month.

According to the existing data, the DA has already achieved 59.93, which means that the January 2026 increase may take it to 60, which was 58 last year. In case the index of December also increases then employees will be assured of a massive increase in their salaries.

The government is however the one to determine this, and thus it is still too early to tell whether it will be increased by 2 percent or 3 percent.

Decision on how DA and DR Hikes are to be made

The question that lingers on the minds of many people is how the government determines Dearness Allowance (DA) and Dearness Relief (DR). In simple terms, the government considers both the inflation statistics after every six months to conclude the DA of employees and DR of pensioners.

The existing figures indicate inflation between July and November. The information in December will be the last item that will be used to determine new rates that will be in effect in January. In case the inflation trend persists, the government will be in a position to assist employees and pensioners even more in the first half of the new year to curb the increasing cost of living.

8th Pay Commission Updates

The 8th Pay Commission, which the government endorsed in November 2025 and is led by retired Justice Ranjana Prakash Desai, will present its recommendations in approximately 18 months. Nevertheless, the fixed amount will only come into use on January 1, 2026, meaning the arrears of the employees will be recovered in any occurrence where there would be a time gap between implementation.

Pension and Salary Increase to 8th Pay Commission expected.

Under the 8th Pay Commission, the central government general employees may increase the minimum basic pay down to 18,000 to 26,000. Pensioners will also be rewarded and minimum pension may go up to [?]20,500. HRA and travel allowances and medical allowances can also be adjusted which will result in significant increase in in-hand income.

Fitment Factor Increase and arrears not expected to exceed 8th Pay Commission.

Employee groups are demanding an improved fitment factor, perhaps between 2.28 and 3.0, and could lead to a history high salary increment. The new pay scale will become effective on January 1, 2026, with the 7th Pay Commission expiring on December 31, 2025. In case of delays in the implementation, employees can also be given huge arrears.

Salary Increase 8th pay commission

The central government employees are likely to get a very noticeable pay increase of 25 to 34 percent, estimated under the range of 30-34, under a proposed fitment factor of 1.83 and 2.46, by the 8 th Pay Commission.

Nevertheless, the Dearness Allowance (DA) element that is now at 55% of basic pay will be brought back to zero with the 8 th Pay Commission in place. The consequence of this reset is that although basic salaries might be raised significantly because of the fitment factor, it will actually be raised marginally since the DA will be eliminated.

Example:
As an example, an employee earning a basic salary of 18,000 may experience an increase to 32,940 on the lower end of the fitment factor (1.83) and 44, 280 on the high end (2.46).
The revised salary would be Rs 91,500 at the lower and 1.23 lakh at the upper end of base salary, notwithstanding that those employees who earn higher base salary like Rs 50,000 will also be affected.
The government has made it clear that it has no plans to integrate DA and basic pay and that DA will still be revised twice a year until a new Pay Commission comes into place.

The Fitment Factor of 8th Pay Commission

The 8th pay commission fitment factor is also expected to be between 1.83 and 2.46 and this will have a direct influence on the basic salary of all the pay matrix levels.

An increased fitment factor will result in high pay increments, which will guarantee an improved payment to the government employees and pensioners. It is a revision to get the salaries in line with the current economic situation and represents a higher percentage increase than the earlier pay commissions.

Note: The Finance Ministry has clarified that no decision has been taken on setting up the 8th Pay Commission and that DA will not be merged with basic pay. Therefore, the projected salary hikes based on DA merger are speculative and not officially confirmed.

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