8th Pay Commission : Another major news is waiting for central government employees. The wait is almost over! The 8th Pay Commission panel is set to be established in April, and once that happens, they’ll start working on their recommendations. The central government greenlit the creation of the 8th Pay Commission back in January. The current 7th Pay Commission is scheduled to wrap up by December 31, 2025, with the new pay commission expected to kick in on January 1, 2026.
However, after the panel is formed, it might take around 15 to 18 months for their final report to be ready. Sources suggest that the recommendations could be submitted by April or May 2026, but the final report will take a bit longer, likely rolling out in 2027. There’s also chatter about whether the Dearness Allowance will be combined with the Basic Salary when the new Pay Commission arrives or if things will stay the same. Additionally, there’s speculation that the government might revise how the Dearness Allowance is calculated under the new commission, possibly changing the base year for these calculations. Let’s explore what this could mean.
Changing the base year is on the table
DA is currently calculated using AICPI-IW data, a practice that dates back to the first pay commission. It’s anticipated that this method will continue, but sources indicate that the government might alter the base year for DA calculations when the new pay commission is put into action.
Right now, the base year for AICPI-IW is 2016, which was updated when the 7th pay commission was introduced. Experts believe that a change in the base year could happen with the 8th pay commission, especially since inflation is on the rise and the DA needs to be adjusted accordingly.
How will the calculation be affected?
The dearness allowance (DA) is provided to central government employees to help them cope with inflation. However, inflation has surged significantly over the past ten years. Despite this, the method for calculating the dearness allowance has remained unchanged due to the base year used for measurement. The rates are adjusted every six months. There’s a chance the government will continue using AICPI-IW as the reference point. However, simply changing the base year could completely alter the calculation, potentially bringing the dearness allowance down to zero and requiring a fresh calculation.
Will the previous dearness allowance be combined?
If the 8th Pay Commission is put into effect by January 1, 2026, the dearness allowance could reach as high as 61% based on current trends, which would be included in employees’ salaries. If the base year is modified, there’s a possibility that the old DA might be merged, but the government hasn’t officially confirmed this yet. Ultimately, these decisions will hinge on the recommendations from the 8th Pay Commission panel.
When did the dearness allowance drop to zero?
The 7th Pay Commission’s recommendations took effect on January 1, 2016, at which point the dearness allowance for central government employees stood at 125%. The 7th Pay Commission integrated this 125% DA into the basic pay, resulting in a new pay structure where the DA effectively became zero in the updated salary matrix, with future DA calculations based on this new basic salary.
Introduction of the new basic pay structure
Under the 6th Pay Commission, the salary framework included ‘Pay in the Pay Band’ and ‘Grade Pay’. The 7th Pay Commission merged these components to form a unified ‘Basic Pay’. This new Basic Pay was derived from the old Basic Pay plus 125% of the Dearness Allowance, leading to an overall increase in employees’ salaries.