8th Pay Commission News: Massive Salary Hikes for Level 1–5 Employees Expected From 2026, Check Details

Mumbai, December 29: Lakhs of central government employees and pensioners are closely monitoring the progress of the 8th Pay Commission (CPC), which is set to fundamentally restructure the national pay matrix. With the 7th Pay Commission’s term ending on December 31, 2025, the new framework is expected to take effect from January 1, 2026. 

The cornerstone of the upcoming salary revision is the "fitment factor," a mathematical multiplier used to convert existing basic pay into the new 8th Pay Commission structure. Historically, this factor has increased with each commission, rising from 1.86 in the 6th CPC to 2.57 in the 7th CPC. 8th Pay Commission: What Is Fitment Factor? Know How It Is Determined As Central Government Employees Await Implementation of New Pay Commission.

Experts are currently divided on the likely multiplier for the 8th CPC. Conservative estimates suggest a factor between 1.92 and 2.28, while more optimistic projections from employee unions and some financial analysts place it between 2.86 and 3.0. A higher fitment factor is seen as necessary by some to offset nearly a decade of inflation and real wage erosion.

Projected Salary Changes for Levels 1 to 5 Under 8th Pay Commission

The impact of these revisions will be most visible in the entry-level and lower-middle pay brackets (Levels 1 to 5). Under the current 7th CPC, the minimum basic pay for a Level 1 employee is ₹18,000. Depending on the approved fitment factor, this could see a dramatic shift:

• At 1.92 Factor: Basic pay could rise to approximately INR 34,560.
• At 2.57 Factor: Basic pay could jump to INR 46,260.
• At 2.86 Factor: Basic pay could reach roughly INR 51,480.

For Level 5 employees, whose current minimum basic pay is INR 29,200, the revised figures could range from INR 56,064 (at a 1.92 factor) to as high as INR 83,512 (at a 2.86 factor). 8th Pay Commission: Expected Pay Hike for Central Government Employees Across Levels 1 to 18 Explained.

Allowances and 'DA Reset'

The transition to the 8th Pay Commission will also involve a significant recalibration of allowances. Traditionally, the Dearness Allowance (DA), which compensates for inflation, is reset to zero when a new pay commission is implemented.

With the current DA projected to reach or exceed 50-60% by January 2026, its merger into the basic pay will form the new base for calculating House Rent Allowance (HRA) and Travel Allowance (TA). While this reset may initially slow the growth of take-home pay, the higher base salary ensures that future DA hikes and annual increments provide more substantial financial gains.

Implementation Timeline and Arrears

The Union Cabinet formally approved the Terms of Reference for the 8th CPC in late 2025, appointing a panel chaired by Justice (retired) Ranjana Desai. The commission has been granted 18 months to submit its recommendations, a timeline that likely stretches into mid-2027.

Consequently, while the revised pay structure is expected to be effective retrospectively from January 1, 2026, actual disbursements may not reach bank accounts until the 2026-27 or 2027-28 fiscal years. In such a scenario, employees would receive a lump-sum payment of arrears covering the intervening period.

(The above story first appeared on LatestLY on Dec 29, 2025 06:56 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).