With the Union Cabinet approving the 8th Pay Commission under Prime Minister Narendra Modi’s leadership, attention has now shifted to how the new framework
will reshape salaries, pensions, and allowances for central government employees. The revised pay structure is scheduled to come into force from January 1, 2026, and is expected to impact both serving staff and retirees across departments. The upcoming Pay Commission will reassess basic pay, retirement pensions, and various allowances, while also recalibrating Dearness Allowance (DA) to reflect prevailing inflation levels. As anticipation builds, government employees are closely tracking updates on salary revisions, pension security, and the all-important fitment factor. How The 8th Pay Commission Salary Hike May Play Out While the government has yet to announce exact hike percentages, early estimates suggest a significant jump in basic pay. Media reports indicate that, depending on the final fitment factor, the minimum basic salary for a central government employee could increase from Rs 18,000 to as much as Rs 51,480. This revision is expected to have a wide reach. According to a Mint report, nearly 50 lakh central government employees, including defence personnel, are currently on the rolls. In addition, around 65 lakh pensioners, including retired defence staff, stand to be affected by the changes. Traditionally, the central government appoints a pay commission every ten years to review wage structures and pension benefits, balancing employee welfare with fiscal sustainability. DA Hikes And Pension Concerns Addressed In December 2025, confusion arose over whether pensioners would continue receiving DA hikes under the new Finance Act. Addressing the issue, the government categorically rejected claims suggesting DA benefits would be stopped. In a social media clarification issued on December 13, authorities termed the claim “fake”. The government further explained that post-retirement benefits, including DA hikes and Pay Commission-linked revisions, would only be withdrawn under exceptional circumstances. “Rule 37 of the CCS (Pension) Rules, 2021 has been amended to state that if an absorbed PSU employee is dismissed for misconduct, their retirement benefits will be forfeited,” the government said. Fitment Factor: The Key Multiplier Explained One of the most closely watched elements of the 8th Pay Commission is the fitment factor, which determines how revised pay is calculated from existing basic salaries. Experts say the Commission will weigh several indicators, including inflation trends, erosion of real wages, government revenue capacity, and long-term fiscal health, parameters that have remained largely unchanged since the 7th Pay Commission in 2015. Early projections suggest the fitment factor could go up to 2.57, potentially benefiting nearly one crore employees and pensioners. However, expectations vary. “While the government has not declared an official number yet, early expectations place the 8th Pay Commission fitment factor in the range of 1.83 to 2.57,” CA Chandni Anandan, Tax Expert at Clear Tax, told Mint. It is also worth noting that although the previous Pay Commission used a fitment factor of 2.57, this does not automatically translate into a proportional salary increase this time around.
