Great news has arrived for millions of central government employees. The government led by Prime Minister Narendra Modi has finally officially announced the 8th Pay Commission. The Finance Ministry issued a notification on November 3, 2025, after which the commission will formally begin its work. This decision has been under discussion among employees for a long time, and the process of implementing it has now begun.
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Commission Composition and Tenure
The 8th Pay Commission will be chaired by Justice Ranjana Desai. Professor Pulak Ghosh will join her as a part-time member, and Pankaj Jain as member secretary. The commission will be headquartered in New Delhi. It will submit its final report to the government within 18 months. If necessary, the commission can also submit an interim report in between to provide initial relief to employees.
Which employees will directly benefit?
This commission will review the salaries and other benefits of industrial and non-industrial employees of the central government, All India Services (IAS), IPS, and IFS officers, the armed forces, union territories, the Audit and Accounts Department of India, regulatory bodies constituted by Parliament (excluding the RBI), and employees of the Supreme Court and High Courts (under the UTs).
Not just salaries, but also allowances and bonuses
The scope of the 8th Pay Commission is broader than ever before. The commission will not only focus on salaries and pensions, but will also review employees’ allowances, bonuses, gratuities, and performance-linked incentives. The commission’s objective is to understand how the current salary structure can be made more attractive to maintain the prestige and competitiveness of government jobs.
Improvements in allowances, bonuses, and performance incentives
The commission will review the existing bonus scheme and may introduce new provisions that provide special rewards to employees who perform well. Additionally, the practicality of the number and types of allowances will be considered to eliminate unnecessary or irrelevant allowances and make necessary improvements.
Possibility of Changes in Pension and Gratuity
The Commission will also review the retirement benefits of employees covered under the National Pension System (NPS) and Unified Pension Scheme (UPS). Increasing the gratuity limit and making the pension system simpler and sustainable may be considered. Relief measures may also be suggested for employees not covered by the NPS under the new pension policy.
States’ Economic Situation Also Under Consideration
The government has clearly instructed the Commission to consider the national economic situation, fiscal balance, and financial capacity of the states before making any recommendations. Furthermore, the Commission will also have to examine the salary structure at the Centre, as well as in PSUs and the private sector, to ensure that its recommendations are practical and sustainable.
The Commission has been assured of independence and cooperation
The Central Government has granted the Commission complete freedom to carry out its work. It can set its own rules and regulations for its functioning and seek expert advice. All ministries and departments have been directed to provide the Commission with the necessary information and cooperation.
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Report by May 2027, a relief package may be forthcoming
The Commission is required to submit its report within 18 months. If the Commission begins work in November 2025, the government will receive its final recommendations by May 2027. However, there is a possibility that the Commission may issue an interim report on some issues to provide early relief to employees. This now seems to bring the long-standing hopes of government employees for a salary increase closer to being fulfilled.