8th Pay Commission Update: Big news for central government employees. This update about the dearness allowance (DA) for central government employees is super significant. A lot of economic experts and employee groups are predicting that the DA could hit 70% before the 8th Pay Commission rolls out.
Right now, the DA for central government employees is projected to be around 60%. Back in July 2025, the DA was at 58%, and we’re looking at a possible increase of 3% to 5% for the January 2026 half-year. If that happens, it might land somewhere between 61% and 63%.
Since the full report and implementation of the 8th Pay Commission will take a while, likely until mid-2027, we can expect two or three more DA hikes by then. If each hike is around 3-4%, we could see it reach 70% before the new salary structure kicks in.
Merging DA and its effect on salary
Whenever the DA surpasses a major milestone (like 50% or more), employee unions push for it to be merged with the basic pay. If the DA gets merged into the basic pay, the house rent allowance (HRA) and other allowances will also automatically go up, since they’re calculated as a percentage of the basic pay.
Fitment Factor
It’s thought that in the 8th Pay Commission, a new fitment factor will be established based on this higher DA, which could bump the minimum salary from Rs 18,000 to anywhere between Rs 34,000 and Rs 41,000. Just a heads up, the official announcement for the DA increase for the January 2026 half-year is typically made by the end of March (around Holi), but the payment will only be effective (with arrears) from January 1, 2026.
Why is the 8th Pay Commission being postponed?
Typically, a new pay commission is implemented every 10 years. The 7th Pay Commission became effective on January 1, 2016, so it was expected that the 8th Pay Commission would be implemented from January 2026. However, according to ICRA, the commission’s report could take 15 to 18 months to be released. Consequently, the likelihood of a salary revision in the near future appears extremely low.
Arrears will increase pressure on the government
ICRA says that whenever the 8th Pay Commission is implemented, the government may implement it retrospectively, starting January 1, 2026. This would mean paying employees arrears for 15 months or more at once. This could lead to a dramatic increase in government expenditure in a single year. It is estimated that salary expenditure could jump by 40 to 50 percent in FY2028.
