8th Pay Commission: 'Normally Expected From January 2026' — Govt Hints At Massive Arrears Payout

The 8th Pay Commission is set to be formally constituted, with the Union Cabinet clearing its Terms of Reference on Tuesday. The panel has been issued an 18-month deadline to submit its report, which suggests that the revised salaries would not be rolled out before 2027.

The government, however, has hinted at a massive payout of arrears. Citing the precedent set by previous pay panels, it said that the 8th Pay Commission's recommendations are also likely to come into effect retrospectively, from January 2026.

In the case of 7th Pay Commission as well, the revised salaries and pensions were rolled out from July 2016, but employees and pensioners were paid six-month arrears for the period starting from January 2016.

"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 (Jan. 1, 2026)," stated an official note issued following the Cabinet meeting on Tuesday.

To be sure, this is not an official confirmation that the arrears would be paid. The government has clarified that it would "normally be expected" to roll out the revised pay retrospectively.

In August, top employee union leaders had also told NDTV Profit that the salary hike would be effective from the start of next year, irrespective of the delay in rollout. "The process is likely to take time. The commission will be set up and hold deliberations with the stakeholders and then submit its recommendations. Then it will be approved by the government... What we are saying is that irrespective of the delay, the effective date of salary hike must be Jan. 1, 2026," Shiv Gopal Mishra, secretary (staff side) of the National Council-Joint Consultative Machinery (NC-JCM), had said.

Notably, the 8th Pay Commission will be headed by Justice (retired) Ranjana Desai, who was also the head of Uniform Civil Code committees in Uttarakhand and Gujarat.

Under her leadership, the pay panel will hold deliberations with various stakeholders, before proposing the fitment factor and other modalities for pay revision.

The last pay panel, which was the 7th Pay Commission, had proposed a fitment factor of 2.57, which meant that the basic salaries and pensions were raised by 157% (or multiplied by 2.57). However, the effective hike was lower – of 23.5% – as the dearness allowance and dearness relief were reset to zero.

In the case of 8th Pay Commission as well, the DA and DR would likely be reset to zero after the revised wages and pensions are rolled out. Presently, the key allowance stand at 58% of the basic pay.

The rollout of 8th Pay Commission's recommendations will also add a significant impact of the exchequer. The fiscal burden could be in the range of Rs 2.4-3.2 lakh crore, according to a report released by Kotak Institutional Equities in July.