8th Central Pay Commission Approved by Union Cabinet for Major Salary and Pension Revision for 1.18 Crore Employees and Pensioners – Firstpost

The Union Cabinet, chaired by Prime Minister Narendra Modi, has formally approved the Terms of Reference (ToR) for the 8th Central Pay Commission, initiating the process for a major overhaul of the pay structure for over 1.18 crore central government employees and pensioners.

The long-awaited move officially kicks off the decadal revision of salaries, allowances, and pensions. The new pay scales are anticipated to be implemented retrospectively from January 1, 2026.

The formation of the Commission comes ten months after the Cabinet initially approved its constitution. Information and Broadcasting Minister Ashwini Vaishnaw confirmed that the panel’s mandate, composition, and timeline have been finalised. The Commission is mandated to submit its comprehensive recommendations to the government within 18 months of its official formation.

The panel will review the current emolument structure, allowances, and pension formulae, with a keen focus on prevailing economic conditions, the need for fiscal prudence, and the likely impact on state government finances, which typically adopt the Centre’s recommendations.

Anticipated salary hurge for central government employees

While the 8th Pay Commission has yet to release its official pay structure, projections suggest a substantial salary hike for central government employees, potentially adding up to ₹19,000 per month to their paychecks. This estimate is based on speculation that the commission may recommend a fitment factor of 2.86, which is a multiplier applied to the existing basic pay. While the final factor is yet to be decided, past commissions have typically recommended a factor around 2.57 (7th CPC).

The final increase, however, is likely to be tied directly to the Union Budgetary allocation for the pay revision. For a mid-level employee currently earning a basic salary of ₹1 lakh per month, the raise could vary:

• 14% Hike: If the government allocates ₹1.75 lakh crore, the employee’s salary could increase to ₹1.14 lakh per month.

• 16% Hike: With a ₹2 lakh crore allocation, the salary could rise to ₹1.16 lakh per month.

• 18% or More Hike: Should the allocation reach ₹2.25 lakh crore, the salary is projected to increase to ₹1.18 lakh per month or higher.

Additionally, allowances such as Dearness Allowance (DA), House Rent Allowance (HRA), and Travel Allowance (TA) will also be recalculated and enhanced.