8th Pay Commission Updates: The last DA increase for 2025 has been implemented, and the dearness allowance (DA) has now reached 58%, effective July 1, 2025. The government has finalized the terms of the 8th Pay Commission and directed the commission to submit its report within 18 months. This means that even if the 8th Pay Commission is implemented later, employees will receive arrears (remaining salaries) starting January 1, 2026. The question now is: will allowances like DA, HRA, and TA continue to increase after December 31, 2025?

When will DA increase?

Dearness Allowance (DA) will continue to be calculated based on the 7th Pay Commission until the 8th Pay Commission recommendations are fully implemented. According to experts, the DA will continue to be increased every six months. Three DA increases are expected in the next 18 months. Currently, DA is 58%, and it is estimated that it could increase to approximately 67% in the next 18 months. After the 8th Pay Commission is implemented, this DA will be merged with the basic salary.

If we assume an average increase of about 3% each time, then…

First hike (after 6 months): DA = 61%

Second hike (after 12 months): DA = 64%

Third hike (after 18 months): DA = 67%

What will be the impact of DA hike on the fitment factor?

The fitment factor is the multiplier used to multiply the old basic salary to determine the new basic salary. An employee’s basic salary receives an increment of approximately 3.5% each year. Two years’ increments and three DA increases combined over 18 months can result in a total basic salary increase of approximately 20%.

This could increase the fitment factor from the current 1.58 to approximately 1.78. If the family unit is increased from 3 to 3.5 and a 15% inflation factor is added, the fitment factor could reach approximately 2.13. This means that employees’ current basic salaries could more than double.

What about HRA, TA?

Yes, in addition to DA, other important allowances may also increase. House Rent Allowance (HRA) is most likely to increase, as it is linked to both basic salary and DA. Similarly, Transport Allowance (TA) and Children Education Allowance (CEA) may also increase. Other allowances, such as Fixed Medical Allowance (FMA) and Dress Allowance for pensioners, are also expected to increase.

HRA (House Rent Allowance): This is linked to DA and basic pay, so an increase in DA will also result in an increase in HRA. HRA rates may be revised depending on the city category.

TA (Travelling Allowance): This may also be revised, although some minor or regional allowances may also be reduced in the 8th Commission.

CEA (Children’s Education Allowance): This can also be increased when the DA reaches 50%. This can increase the amount for children’s education or hostel subsidies.

FMA (Medical Allowance): Fixed Medical Allowance for pensioners is likely to increase.

Dress Allowance and Risk Allowance: These allowances will also be reviewed and some increase may be made.

Will the increment also continue?

Yes, employees will continue to receive their annual salary increments until the 8th Pay Commission is implemented. These increments will be given according to the 7th Pay Commission’s pay matrix.