Cabinet Greenlights 8th Pay Commission; 1.19 Crore Employees & Pensioners Set for Major Salary Hike from 2026

Digital Desk

In a landmark decision poised to significantly boost the finances of millions, the Union Cabinet, chaired by Prime Minister Narendra Modi, has formally approved the terms of reference and structure for the much-anticipated 8th Central Pay Commission (CPC). This pivotal move sets the stage for a comprehensive review of salaries, pensions, and service conditions for central government staff, with benefits likely to be effective retroactively from January 1, 2026.

A Windfall for a Vast Workforce

The implementation of the 8th Pay Commission is projected to be a game-changer for a massive segment of the population. The landmark decision is set to directly benefit over 50 lakh (5 million) central government employees and approximately 69 lakh (6.9 million) pensioners, impacting nearly 1.19 crore (11.9 million) individuals and their families across India.

Projected Salary Revisions: A Significant Jump

While the official report from the commission is awaited, initial estimates and proposals from staff advocates suggest a substantial increase in basic pay. A key driver of this increase will be the fitment factor, which is used to multiply existing salaries to arrive at new basic pay.

Current Fitment Factor: 2.57 (7th CPC)

Proposed Fitment Factor: Ranging from 2.46 to 2.86

If a fitment factor of 2.46 is applied, the basic salary of an employee at the lowest level (Level-1) could see a jump from the current ₹18,000 to approximately ₹44,280. This revision will cascade through all pay levels, with senior-level employees witnessing even more substantial increments. For instance, a Level-6 employee's basic pay could rise from ₹35,400 to around ₹87,084.

Structural Reforms and the DA Merger

Beyond the headline salary figures, the 8th Pay Commission is also expected to streamline the pay structure itself. A key proposal on the table is the merger of several pay levels (e.g., Level 1 with 2, Level 3 with 4) to address stagnation and create a clearer path for career and financial progression for lower-level employees.

It is crucial for employees to understand that with the implementation of a new pay commission, the existing Dearness Allowance (DA), currently at 55%, will be reset to zero. This is a standard procedure, as the new pay scales are designed to inherently account for inflation up to that point. While the basic pay sees a major hike, the initial total salary (Basic + HRA) may appear differently due to the removal of the DA component, but it represents a consolidated and increased pay structure.

The Road to Implementation: Why 2028?

While the benefits are slated to be effective from January 2026, the government has indicated that the full implementation may extend until 2028. This timeline is consistent with previous pay commissions, which typically take two to three years to finalize their extensive reports, undergo government review, and secure final approval. The formation of the commission, a short-term body with a single chairperson, is expected to be announced shortly, kicking off this detailed process.

This approval marks the first official step in a transformative financial overhaul for India's central government workforce, promising enhanced economic security for millions and injecting fresh momentum into the economy.