Will 8th Pay Commission be implemented in January 2026? Take a look at possible timeline, DA hike, and other benefits

Economic Times

2 days ago

TIL Creatives Experts anticipate that the 8th Pay Commission may not be fully implemented until FY27 Around 11.2 million central government employees and pensioners are looking forward to the rollout of the 8th Pay Commission, which should kick in right after the term of the ongoing 7th Pay Commission ends in December 2025.
Since the 8th Pay Commission is expected to boost basic pay, allowances, pensions, and retirement benefits of government employees and pensioners, many are wondering if it will come into effect as early as next year, i.e., starting January 2026, or if there will be a delay. 8th Pay Commission likely to be implemented in FY 2027, says a report A recent report by Ambit Capital titled '8th Pay: Will it be bang for the buck? ' suggests that the 8th Pay Commission may boost government salaries and pensions by as much as 30-34%. But, it looks like we won't see it in action until FY27, i.e,. between April 2026 and March 2027. The reason for this delay is that even though the central government announced the 8th Pay Commission back in January this year, they haven't given any details about who will be its chairman, the members, or the terms of reference, as of July 2025. The entire process, from setting up the commission to actually rolling it out, takes a lot of time.For instance, the 7th Pay Commission was formed in February 2014, but it only came into effect starting January 2016. The commission members had 18 months to submit their recommendations and reports, which the central government then reviews before giving the final approval. According to Sandeep Bajaj, Advocate, Supreme Court of India, 'The implementation of the 8th Pay Commission, though formally announced in January 2025, appears to be progressing at a measured pace. Crucial milestones—such as the appointment of the Commission's chairperson and members, and the finalisation of its Terms of Reference—remain pending.'Bajaj further says that historically, Pay Commissions, which have a 10-year tenure, generally take about 2 years from their constitution to actual rollout. By that logic, the chances of the 8th Pay Commission being effective starting January 2026 look very remote, with a strong possibility that it may now stretch well into 2027. According to Bajaj, one of the reasons is that there were no budgetary allocations announced for the 8th Pay Commission in the Union Budget 2025-26. Data from Ambit Capital suggests that the government will need an additional Rs 1.8 trillion to account for the estimated 30-34% hike in salaries and pensions.'There is a lack of administrative momentum regarding the implementation of the 8th Pay Commission. While any eventual revision is expected to be applied retrospectively, the deferment could lead to mounting frustration among central government employees and pensioners, particularly in the face of persistent inflationary pressures', continued Bajaj. Delay in implementation may lead to mounting arrears The Pay Commissions reviews and proposes hikes to the salary structure, allowances such as DA (Dearness Allowances), and other benefits, to keep employee compensations in line with inflationary pressures, and also, the private sector. For this, the DA is revised twice every year, in January and July. Hence, DA hikes are effective from January 1 and July 1 of the respective year. However, the employees and pensioners do not get their adjusted compensation right away. For DA hikes announced in January, employees generally get their cumulative arrears till the month it's actually implemented, which can typically be March or April. Earlier this year, too, the government had hiked the DA from 53% to 55% of basic pay, effective January 1, 202,5, but it was paid after a delay. Similarly, for DA hikes that are announced in July, employees and pensioners usually get their arrears or dues for July, August, and September along with October salary, which also coincides with India's festive season, with people celebrating Dussehra and Diwali. If the implementation of the 8th Pay Commission is further pushed back, it might lead to bigger arrear payments for the government. Plus, keep in mind that the recommendations of the 8th Pay Commission are due by December 2025, and while they would be effective from January 2026, they will only be implemented once the government approves them. 'The delay seems to be a mix of bureaucratic slowdowns, concerns over the financial burden, which could run into lakhs of crores, and perhaps some political timing at play. For central government employees and pensioners, this means waiting longer for the expected salary and pension hike of around 30–34%. The uncertainty is understandably frustrating, but if the hike ends up being backdated, there might be some arrears paid out later. However, as of now, everything's still up in the air', says Rohit Jain, Managing Partner, Singhania & Co.According to the Ambit Capital report, on a current basic pay of Rs 50,000 and with Dearness Allowance (DA) projected to reach 60% by the end of 2025 (up from the current 55% with one more likely increment in July), salaries are expected to increase by at least 14%, and by 54% in the best possible scenario, under the 8th Pay Commission.