Mumbai, August 8: The Government of India, under Prime Minister Narendra Modi, is preparing to constitute the 8th Central Pay Commission (CPC), which will review and recommend salary and pension revisions for around 50 lakh central government employees and 65 lakh pensioners. The revised pay structure is expected to come into effect from January 1, 2026, though delays in the process could push implementation to 2027.

Key ministries such as the Ministry of Home Affairs, the Ministry of Defence, and the Department of Personnel and Training, along with various state governments, are currently being consulted. A formal notification appointing the chairperson and members of the 8th CPC is expected soon. 8th Pay Commission Update: Government Confirms Panel Formation, Seeks Stakeholder Inputs; Notification and Member Appointments Likely Soon.

What is the Fitment Factor?

At the heart of the pay revision lies the fitment factor, a multiplier applied to an employee’s existing basic pay to arrive at the new revised pay. For instance, if the current basic pay is INR 30,000 and the fitment factor is 2.57, the new basic becomes INR 77,100.

The 7th CPC used a fitment factor of 2.57. Experts now predict that the 8th CPC may recommend a fitment factor between 1.83 and 2.86, depending on economic conditions, inflation, and the government’s fiscal space. 8th Pay Commission Rollout Likely by Late 2026; Minimum Pay May Rise to INR 30,000: Report.

Although many believe that a fitment factor of 2.5 would double their salaries, that's not exactly the case. According to Ambit Capital, even if the 8th CPC recommends a fitment factor as high as 2.46, the actual take-home salary hike may be just 30%-34%, after adjustments for Dearness Allowance (DA) and other allowances.

What Happens to DA?

Just like previous commissions, the DA will be reset to zero when the new pay structure is implemented. It will then start accumulating again based on inflation.

Salary Projections Across Pay Grade

Here's how the revised salaries might look under two projected fitment factors, 1.92 and 2.57, for select grade pays. These include basic pay, allowances (HRA at 24% for X-class cities, TA), and standard deductions (NPS, CGHS).

  • Grade Pay 1900:

1.92 Factor: Basic INR 54,528 | HRA INR 13,086 | Net Salary: INR 65,512

2.57 Factor: Basic INR 72,988 | HRA INR 17,517 | Net Salary: INR 86,556

  • Grade Pay 2400:

1.92 Factor: Basic INR 73,152 | Net Salary: INR 86,743

2.57 Factor: Basic INR 97,917 | Net Salary: INR 1,14,975

  • Grade Pay 4600:

1.92 Factor: Basic INR 1,12,512 | Net Salary: INR 1,31,213

2.57 Factor: Basic INR 1,50,602 | Net Salary: INR 1,74,636

  • Grade Pay 7600:

1.92 Factor: Basic INR 1,53,984 | Net Salary: INR 1,82,092

2.57 Factor: Basic INR 2,06,114 | Net Salary: INR 2,41,519

  • Grade Pay 8900:

1.92 Factor: Basic INR 1,85,472 | Net Salary: INR 2,17,988

2.57 Factor: Basic INR 2,48,262 | Net Salary: INR 2,89,569

While employees are hopeful for a substantial hike, it is essential to understand that the fitment factor only affects basic pay. Final take-home increases depend on several variables, including DA reset, allowance restructuring, and tax implications. Kotak Institutional Equities warns that if the fitment factor is kept at the lower end of 1.8, the actual salary increase could be just 13%, much lower than public expectations.

The 8th Pay Commission is in its early stages, and no official recommendations have been made yet. Once the government notifies the commission and it submits its report, employees and pensioners will get a clearer picture of the salary structure ahead.

(The above story first appeared on LatestLY on Aug 08, 2025 11:40 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).