8th Pay Commission effective from January 1: Salary hike, pension, fitment factor explained for Central govt employees

8th Pay Commission: The Prime Minister Narendra Modi-led, Union Cabinet-approved 8th Pay Commission is set to take effect from 1 January 2026, with central government employees focusing on their expected salary hikes, pensions and fitment factor among other things.

The 8th Pay Commission will revise pensions, allowances, and salaries of serving and retired central government employees. Alongside salary hikes, the Commission will also adjust the Dearness Allowance (DA) to factor in inflation.

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Now that central government employees are focusing on the implementation of the 8th Pay Commission, people will be expecting an increase in salary effective immediately. Union Cabinet, in its notification in October 2025, said that the recommendations of the pay commission will be expected from 1 Janaury 2026.

“Usually, the recommendations of the pay commissions are implemented after a gap of every ten years. Going by this trend, the effect of the 8th Central Pay Commission recommendations would normally be expected from 01.01.2026,” the Cabinet said in October while announcing the Terms of Reference.

8th Pay Commission Salary Hike — Explained

Although the government has not released details about the percentage of hikes under the 8th Pay Commission, media reports estimate that, based on the fitment factor, a central government employee's basic salary could rise to ₹51,480 from ₹18,000.

Mint earlier reported that there are nearly 50 lakh central government employees, including defence personnel, and almost 65 lakh retired central government pensioners, including defence retirees.

The central government sets up pay commissions once every ten years to evaluate and revise employee salaries and retirement pensions.

8th Pay Commission DA Hikes — Explained

In a social media post on 13 December 2025, the Indian government debunked a claim that central government pensioners would stop receiving DA hikes under the new Finance Act 2025.

Authorities clarified that the claim was “fake” and that post-retirement benefits, such as DA hikes and Pay Commission revisions, would only be stopped if an employee was “dismissed for misconduct.”

“Rule 37 of the CCS (Pension) Rules, 2021 has been amended to state that if an absorbed PSU employee is dismissed for misconduct, their retirement benefits will be forfeited,” the government said.

8th Pay Commission Fitment Factor — Explained

The 8th Pay Commission will consider multiple factors, including inflation, and aim to ensure sustainable public finances that have remained unchanged since the 7th Pay Commission in 2015.

Experts told Mint that the government will take into account inflation trends, real wage erosion, fiscal capacity, and its broader compensation philosophy.

Early projections from the 8th Pay Commission suggest that the fitment factor, determined in relation to the economic inflation of a country, may be as high as 2.57, which will likely raise central government salaries and pensions for nearly one crore employees and retirees.

“While the government has not declared an official number yet, early expectations place the 8th Pay Commission fitment factor in the range of 1.83 to 2.57,” CA Chandni Anandan, Tax Expert at Clear Tax, told Mint.

As per previous media reports, the current Pay Commission used a fitment factor of 2.57; however, this does not necessarily mean that salaries will increase by the same amount.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or experts, and not of Mint.