8th Pay Commission Update: Government May Form Panel This Month; Check Fitment Factor, DA Merger, and Expected Salary Hike

Ganpat Singh Chouhan

New Delhi, May 7, 2025 In a major development for central government employees and pensioners, the Union Government is likely to form the 8th Pay Commission panel this month, paving the way for a significant overhaul in salary structures and pensions. Sources indicate that the committee formation process is in advanced stages and could be finalized by May 2025.

Once constituted, the panel will begin work on revising pay scales, allowances, and pensions, with implementation expected from January 1, 2026. The announcement is a source of optimism for over 1 crore employees and 65 lakh pensioners awaiting salary revisions.

Who Will Be on the Panel?

While official names are yet to be disclosed, the 8th Pay Commission is expected to follow precedent, with the panel headed by a retired Supreme Court judge or a senior government official. It will also include economists, public finance experts, and specialists in government service rules.
The panel will interact with employee unions, ministries, and financial authorities to prepare a balanced and forward-looking report.

Key Recommendations Expected

Once operational, the commission is expected to submit a detailed report that may include:

1. Fitment Factor Revision

The fitment factor determines how the existing basic pay is revised.
In the 7th Pay Commission, it was 2.57x.
Unions are demanding a hike to 3.68x, while experts predict a more likely range of 2.8x to 3.0x.
This factor will significantly impact how much the new basic salary increases.

2. Dearness Allowance (DA) Merger

DA, which may exceed 60% by 2026, is likely to be merged into the basic pay, just as 125% DA was merged during the 7th Pay Commission.
After this merger, DA will reset to zero, and fresh increments will begin from the revised basic.

3. New Pay Matrix and Structure

The existing pay matrix may be refined for greater equity across levels.
Some levels could be merged or rationalized to reduce disparities in pay across departments.

4. Updated Allowances

House Rent Allowance (HRA), Travel Allowance (TA), and Children’s Education Allowance (CEA) may be revised based on inflation and city classification.
Policies may be modernized to reflect current economic and social realities.

5. Pension Revisions

The commission will also recommend changes for 65 lakh senior pensioners.
Pensions may be revised based on the new fitment factor and merged DA, ensuring fair post-retirement income.

How Much Salary Increase Can Be Expected?

The expected salary hike will be influenced by two major components:
1. DA Merger: A 60% DA merged into the basic could mean an immediate jump in gross salary.
2. Fitment Factor Application: If the fitment factor is raised to 3.0, an employee currently drawing ₹18,000 as basic could see it rise to ₹54,000.

Overall, employees may see a salary increase ranging from 25% to 40%, depending on their current pay level, post, and allowances.

Author Profile

Ganpat Singh Chouhan: My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.