The 8th Pay Commission is expected to commence its work in April of the financial year 2025-26. According to Expenditure Secretary Manoj Govil, the Union cabinet will need to approve the terms of reference (ToR) for the Commission. Input will be sought from the Ministry of Department of Personnel & Training and the Ministry of Defence. Govil clarified that the 8th Pay Commission will not have any financial impact in the financial year 2026.
The announcement of the 8th Pay Commission raised expectations of its implementation starting on January 1, 2026. However, it is crucial to highlight that the government has yet to release the Terms of Reference for the 8th Pay Commission. While Budget 2025 introduced several proposals for taxpayers, there was no mention in the budget documents of the expenses that the Central government will incur for the implementation of the 8th Pay Commission.
Rohitaashv Sinha, Partner, King Stubb & Kasiva, Advocates and Attorneys, told the Economic Times, “The 8th Pay Commission implementation process will follow the expiration of the 7th Pay Commission term in 2026. The Pay Commissions have become a regular 10-year process to conduct salary structure evaluations for central government employees. The 8th Pay Commission faces a low possibility of implementation from January 1, 2026. However, the implementation date of the 7th Pay Commission occurred in 2016 thus indicating the 8th Pay Commission recommendations will execute likely in 2026.”
Raheel Patel, Partner, Gandhi Law Associates says, “Given past trends, pay commissions typically take a year to submit their recommendations, which means that, in theory, implementation from January 1, 2026, remains possible. However, the lack of budgetary provisions raises doubts about whether the financial burden will be accommodated within the current fiscal planning. Moreover, the Expenditure Secretary’s statement that the cost impact will be felt from FY 2026-27 implies that the real financial adjustments will be deferred. This could mean a staggered implementation or a delayed rollout.”
8th Pay Commission
The government is in the process of establishing the 8th Pay Commission to reassess and enhance the salaries and pensions of central government employees, as well as retirees. The upcoming review will include salary hikes and adjustments in Dearness Allowance to align with India’s inflation rate.
On January 16, 2025, Prime Minister Narendra Modi and the Union Cabinet have granted approval for the creation of the 8th Pay Commission. This commission will be responsible for evaluating the salaries of approximately 50 lakh central government employees and the allowances for 65 lakh pensioners.
Earlier this month, the National Council of Joint Consultative Machinery (JCM) Staff Side presented its recommendations for the Terms of Reference (ToR) of the 8th Central Pay Commission (CPC). Their suggestions include significant alterations to the pay structure, allowances, and benefits for government employees. A notable proposal within the ToR is the merging of certain pay scales to simplify salary structures and rectify career progression discrepancies.
Within the JCM framework, the “National Council Staff Side” comprises representatives from various employee unions and associations involved in national-level discussions with the government. Conversely, the “National Council Official Side” consists of government officials representing different ministries and departments who collaborate with the staff side on matters related to employees. The National Council JCM is overseen by the Union Cabinet Secretary.
The Department of Personnel and Training (DoPT) has recently issued a request for suggestions from the Staff Side of the National Council JCM to help finalize the Terms of Reference for the upcoming 8th Central Pay Commission, subsequent to the government’s approval granted last month.
Shiv Gopal Mishra, Secretary of NC-JCM Staff Side, presented a comprehensive proposal highlighting key areas requiring attention. One significant recommendation from the Staff Side is to consolidate pay scales for government employees within levels 1-6.
Currently, the pay scale structure consists of 18 levels, ranging from level 1 to level 18. In line with the 7th Pay Commission, the minimum monthly pay at level 1 was fixed at Rs 18,000, while the maximum pay at level 18 was set at Rs 2,50,000 per month.
Key proposals
An important proposal put forth by the Staff Side suggests consolidating lower pay scales to ensure fair compensation and facilitate career advancement. The recommendation involves merging specific levels: Level 1 and Level 2, Level 3 and Level 4, Level 5 and Level 6.
This proposed merger aims to rectify disparities in salary progression and establish a more transparent pay structure. It is believed that combining these levels will facilitate employee growth by reducing stagnation and fostering improved financial development over time.
Currently, a Level 1 employee receives Rs 18,000 per month as basic pay, while a Level 2 employee receives Rs 19,900. Upon merging these levels, the Level 1 employee stands to benefit more, as the revised pay structure will start from one. Following the anticipated increase in pay post the 8th pay commission, with a proposed fitment factor of up to 2.86, the revised basic pay is estimated to rise to Rs 51,480.