8th Pay Commission: New Formula for Salary Revision, Know Who Benefits Most
The Central Government announced the formation of the 8th Pay Commission in January 2025, which will be implemented after the tenure of the 7th Pay Commission ends in December 2025. Since this announcement, discussions have intensified about how the new pay commission will revise the salaries of central government employees—especially regarding the fitment factor and the merger of DA (Dearness Allowance) into the basic pay.
What is the Fitment Factor?
The fitment factor is a multiplier used to revise the basic pay of employees under the new pay structure. Its purpose is to ensure uniform salary increases across all levels by incorporating the impact of inflation and allowances.
How DA Merger Happened in Previous Pay Commissions
| Pay Commission | DA at Time of Merger | Fitment Factor |
|---|---|---|
| 5th CPC | 74% | 1.86 |
| 6th CPC | 115% | 1.86 |
| 7th CPC | 125% | 2.57 |
Before the 7th Pay Commission was implemented in January 2016, employees were receiving 125% DA on their basic pay. The commission proposed a fitment factor of 2.57, which included basic pay, 125% DA, and a real increase of approximately 14.22%.
Example under 7th Pay Commission:
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Basic Pay: ₹10,000
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With 125% DA: ₹12,500
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Total before fitment: ₹22,500
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With 14.22% increment: ~₹3,200
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New Pay: ₹25,700
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Fitment Factor: 2.57
What to Expect in the 8th Pay Commission
Currently, employees are receiving more than 50% DA, and by 2025, it is expected to reach around 62%. Like previous commissions, it is likely that the new pay structure will merge DA into basic pay and apply a new fitment factor, which could be 3.0 or higher, as per expert analysis.
Will Employees Retiring Before Jan 1, 2026 Be Left Out?
A common concern is whether those retiring before the implementation of the 8th CPC will miss out on its benefits. Usually, the government gives the new pay retrospectively, so there is a possibility that such retirees will also benefit—though it will depend on the government’s final notification.
DA Hike from Jan 2025: What You Should Know
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A 2% DA hike has been approved, increasing DA from 53% to 55% of basic pay.
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The hike is less than usual, disappointing many employees, as earlier increases ranged from 3-4% every time.
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Employees will receive arrears for January, February, and March 2025 with their April salary.
Example:
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For a basic salary of ₹18,000:
2% increase = ₹360/month, or ₹4,320 annually -
For a pension of ₹9,000:
2% increase = ₹180/month, or ₹2,160 annually
Will DA Be Merged Into Basic Pay Again?
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The 5th CPC had merged DA into basic salary after it exceeded 50%, but later commissions discontinued this practice.
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Currently, there's no official confirmation about merging DA with basic pay before 2026.
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Minister of State for Finance Pankaj Chaudhary clarified in Rajya Sabha (March 18, 2025) that the government has no plan to merge DA into basic pay before adopting the 8th CPC report.
How Will DA Be Calculated Under the 8th CPC?
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DA for central employees is calculated using the fitment factor.
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Experts predict the 8th CPC may recommend a fitment factor between 2.28 to 2.86, potentially increasing basic pay by 40–50%.
What Is Fitment Factor Exactly?
The fitment factor is a formula used during pay commission implementations to calculate revised salaries. It includes the effect of inflation and previous allowances (like DA). For example, under the 7th CPC:
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Fitment factor was 2.57
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Basic Pay: ₹30,000 → New Pay: ₹77,100
Expected Salary Increase Under 8th CPC
If the fitment factor is increased to 2.83, and an employee's basic salary is ₹50,000, then:
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New salary = ₹50,000 × 2.83 = ₹1,41,500
This would be a significant boost to income for millions of central government employees and pensioners.
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