The Government of India has formally constituted the 8th Central Pay Commission (8th CPC) to revise the salary and pension structure of nearly 1.2–1.3 crore central government employees and pensioners. The panel is led by Justice Ranjana Prakash Desai as Chairperson, with IIM Bangalore Professor Pulak Ghosh serving as Part-Time Member and Petroleum Secretary Pankaj Jain as Member Secretary.

The Commission has been given 18 months to complete its review and submit recommendations, with implementation likely from 1 January 2026.

The key feature of the 8th CPC will be the fitment factor—a multiplier applied to existing basic pay to arrive at a new basic. Early estimates place this factor somewhere between 1.8× and 2.5×, though it will be confirmed in the final report. Alongside this, the new structure is expected to reset Dearness Allowance (DA) to 0%, while House Rent Allowance (HRA) and Transport Allowance (TA) will be reapplied on fresh base slabs rather than legacy DA-inflated values.

Together, these measures will modernise the pay framework, align allowances with current realities, strengthen long-term retirement benefits, and provide a cleaner platform for future increments. This article outlines what may change under the 8th CPC, explains the role of the fitment factor, and illustrates the impact through practical salary examples across grades and cities.

Why the 8th CPC — What Will Change?

The 8th Central Pay Commission is not just a scheduled revision; it responds to today’s economic and administrative reality. Since the 7th CPC came into effect in 2016, inflation, cost of living, and the scope of government services have all expanded. At the same time, pay structures have grown complicated, with a significant share of salaries being driven by accumulated Dearness Allowance (DA) rather than core basic pay.

The 8th CPC aims to simplify, rebalance, and future-proof compensation for central government employees and pensioners. Its core objectives are:

Why the Change?

• Rising inflation has pushed DA to high levels, distorting salary composition.
• Basic pay has lagged behind market equivalents over time.
• Allowances depend heavily on DA, creating uneven growth patterns.
• Modern roles demand new skills in digital, health, infrastructure, and data systems.
• Retirement benefits need stronger long-term support.

Together, these factors create the need to refresh the structure rather than add layers to the old one.

What Will Change?

The 8th Pay Commission is expected to introduce a structural reset in how central government salaries are calculated. Three major shifts are anticipated:

1. Re-anchoring Basic Pay using a fitment factor
2. Resetting DA
3. Restoring HRA and TA to their base structures

These changes aim to simplify the compensation system, bring allowances back to a clean starting point, and strengthen long-term retirement outcomes.

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1) Basic Pay Reset through Fitment

The most critical change is a fresh calculation of basic pay using a fitment factor.
This converts the 7th CPC basic pay into a new basic pay under the 8th CPC.

Formula:
Basic (8th CPC) = Basic (7th CPC) × Fitment

All major salary elements thereafter—HRA, future DA, NPS, pension, increments—will be calculated from this new basic.

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2) Dearness Allowance (DA) Will Reset to Zero

Under the 7th CPC, DA has risen steadily with inflation and currently forms a significant portion of salary.

At the start of the 8th CPC period, the DA is expected to reset to:

DA = 0%

After this reset, DA will again begin to increase over time based on inflation.
This ensures that accumulated DA does not carry forward, allowing the system to restart from a transparent baseline.

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3) HRA Will Return to Base Slabs

House Rent Allowance (HRA) will not be reduced.
It will simply be recalculated on the new basic and aligned to the base slab structure:

City Class	HRA Rate
X	24%
Y	16%
Z	8%

Under the 7th CPC, HRA could rise to 27/18/9 or 30/20/10 when DA crossed 25% and 50%.
Because DA will reset to zero at the beginning of the 8th CPC, those enhanced rates will no longer apply at the start.

Therefore, HRA returns to its correct base levels (24/16/8) and will rise again only when DA crosses the prescribed thresholds.

This is a realignment, not a reduction.

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4) TA Will Reset to Base Slabs (No DA Component)

Transport Allowance (TA) under the 7th CPC is paid as:

TA = Base Slab + DA on TA

Because DA will restart at zero under the 8th CPC, TA will revert to its base slab amounts only:

Pay Level	Annexure Cities (X)	Other Places
Level 9+	₹7,200	₹3,600
Level 3–8	₹3,600	₹1,800
Level 1–2	₹1,350	₹900

This means TA is not being cut; it is simply returning to the original DA-free slab until DA begins to rise again in the new cycle.

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5) NPS Will Be Calculated Only on Basic

With DA reset to zero, NPS contributions will be calculated only on basic pay:

Employee contribution = 10% of Basic
Government contribution = 14% of Basic

Over time, as Basic increases through increments and promotions, NPS balances will continue to compound.

Fitment Factor Explained

The fitment factor is the core mechanism through which salaries will transition from the 7th CPC structure to the 8th CPC structure.
It acts as a uniform multiplier applied to the current basic pay to arrive at the new revised basic.

In simple terms:

Revised Basic (8th CPC) = Existing Basic (7th CPC) × Fitment Factor

This revised basic becomes the foundation on which nearly every salary component is built, including HRA, future DA, NPS contributions, increments and pension.

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Why a Fitment Factor Is Used

Over time, inflation erodes the value of basic pay. Although DA provides temporary relief by adjusting for cost-of-living increases, it does not correct the underlying pay scale.
A fitment factor resets the system by lifting the basic pay to a new level, ensuring that the salary structure reflects economic changes over the previous decade.

Thus, instead of carrying forward inflated allowances and accumulated DA, the 8th CPC begins with a fresh foundation.

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Expected Range

The final fitment factor will be recommended by the Commission in its report.
Early financial discussions indicate a range of approximately 1.8× to 2.5×, though different analyses have suggested higher or lower values based on fiscal capacity.

For illustration purposes in this article, we have assumed a fitment factor of 1.92×.
This rate is neither the highest nor lowest estimate currently discussed and offers a reasonable working example.

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Why Fitment Matters

The fitment factor raises basic pay uniformly across levels and cadres.
This increase in basic has several downstream implications:

1. Higher pension base
   Pension is calculated from basic pay; a higher basic leads to a stronger pension.
2. Higher future increments
   Annual increments (typically 3%) apply on basic; a higher basic compounds better over time.
3. Higher NPS contributions
   Both employee and government contributions increase, helping build a stronger retirement corpus.
4. Higher HRA
   Since HRA is calculated as a percentage of basic, the reset boosts HRA from day one.

Because so much depends on basic pay, the fitment factor indirectly affects not only current take-home salary but also long-term financial well-being.

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A Simple Illustration

If the fitment factor is 1.92×:

Existing Basic (7th CPC)	Revised Basic (8th CPC)
₹ 23,100	₹ 44,352
₹ 45,000	₹ 86,400
₹ 80,000	₹ 153,600

7th vs 8th CPC Salary Structure — Side-by-Side Overview

While the overall framework of government pay remains similar — basic pay plus allowances — the way these components are derived under the 8th CPC is expected to change in meaningful ways.
The 7th CPC gradually became allowance-heavy due to rising DA, whereas the 8th CPC aims to re-anchor compensation around Basic Pay.

A clear comparison is provided below.

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Structural Comparison

Component	7th CPC	8th CPC (Exploratory)
Basic Pay	Derived from Pay Matrix	Re-anchored using Basic × Fitment
Fitment	Already applied (2.57 at rollout)	New Fitment to be applied (illustrative 1.92)
DA	% of Basic; currently ~58%	Reset to 0% at rollout
HRA	30% / 20% / 10% (after DA triggers), base 24/16/8	Returns to 24 / 16 / 8% of revised Basic
TA	Slab + DA on slab	Slab only (no DA loading)
NPS	% of (Basic + DA)	% of Basic only
Pension	Based on Basic + DA; periodic DR	Based on revised Basic; DR restarts from zero
Allowance Growth	Driven heavily by DA rise	Expected to grow moderately with DA restart

Key Shifts Explained

1. Basic Pay Re-anchored
   Under 7th CPC, pay was based on the Pay Matrix, which has now aged.
   Under 8th CPC, Basic Pay is refreshed through a fitment multiplier, creating a new foundation.
2. DA Reset to Zero
   Under 7th CPC, DA grew steadily with inflation.
   Under 8th CPC, DA resets to zero and begins a fresh cycle.
3. HRA Returns to Base Levels
   Under 7th CPC, HRA could rise to 30/20/10 depending on DA.
   Under 8th CPC, HRA returns to the base 24/16/8 since DA restarts at zero.
4. TA Reverts to Pure Slab
   Under 7th CPC, TA included a DA component.
   Under 8th CPC, TA becomes a fixed slab without DA loading.
5. NPS Becomes Easier to Compute
   With DA = 0 at rollout, NPS = % of Basic only — cleaner and predictable.

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Why This Reset?

Under the 7th CPC, DA-linked increments caused allowances to inflate faster than basic pay.
Over time, this made the salary structure top-heavy and inconsistent across levels and locations.

The 8th CPC seeks to:

• Restore Basic Pay as the primary anchor
• Simplify the allowance framework
• Improve long-term NPS and pension outcomes
• Create a clean base for the next decade

The system becomes more transparent and easier to plan around, both for employees and for the government.

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Conceptual View

Under 7th CPC:
Growth was driven by DA accumulation, which inflated HRA and TA.

Under 8th CPC:
Growth begins from a revised Basic Pay, with DA and allowances restarting from their foundation.

This makes structural growth more measured but strengthens long-term benefits tied to Basic (increments, pension, NPS).

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Example Salary Calculations: 7th CPC vs Exploratory 8th CPC

To understand how salaries may change under the 8th Central Pay Commission, we examine three representative employees across different levels and cities.

Assumptions remain:

7th CPC Rules

• DA = 58% of Basic
• HRA = X / Y / Z = 24% / 16% / 8%
• TA = Base slab × (1 + DA)
• NPS (Employee) = 10% × (Basic + DA)
• CGHS = based on grade

Exploratory 8th CPC Rules

• Basic (8th) = Basic (7th) × Fitment
• Fitment = 1.92
• DA = 0%
• HRA = 24% / 16% / 8%
• TA = Base slab only
• NPS (Employee) = 10% × Basic (8th)

CGHS per month:
Levels 1–5 = ₹250
Level 6 = ₹450
Levels 7–11 = ₹650
Level 12+ = ₹1,000

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Case 1 — Aman

Junior Secretariat Assistant (JSA)
Level 2
Posted in X-City (Delhi)
Basic (7th CPC): ₹23,100
Experience: 5 increments (~5 years in post)

Under 7th CPC

Component	Amount (₹)
Basic	23,100
DA @ 58%	13,398
HRA @ 24%	5,544
TA = 1,350 × (1 + 58%)	2,133
Gross Salary	44,175

Employee NPS = 10% × (Basic + DA) = 3,649
CGHS = 250

Approx. Take-home = 40,276

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Under Exploratory 8th CPC

Component	Amount (₹)
Basic = 23,100 × 1.92	44,352
DA	0
HRA @ 24%	10,644
TA (slab)	1,350
Gross Salary	56,346

Employee NPS = 10% × Basic = 4,435
CGHS = 250

Approx. Take-home = 51,661

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Summary — Aman

Item	7th CPC (₹)	8th CPC (₹)
Gross	44,175	56,346
Take-home	40,276	51,661

Aman experiences a clear uplift, with a higher basic anchoring stronger long-term benefits such as NPS and pensions.

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Case 2 — Ramakant

Assistant Section Officer (ASO)
Level 7
Posted in Y-City
Basic (7th CPC): ₹44,900
Experience: Newly appointed (0 increments)

Under 7th CPC

Component	Amount (₹)
Basic	44,900
DA @ 58%	26,042
HRA @ 16%	7,184
TA = 1,800 × (1 + 58%)	2,844
Gross Salary	80,970

Employee NPS = 10% × (Basic + DA) = 7,094
CGHS = 650

Approx. Take-home = 73,226

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Under Exploratory 8th CPC

Component	Amount (₹)
Basic = 44,900 × 1.92	86,208
DA	0
HRA @ 16%	13,793
TA (slab)	1,800
Gross Salary	101,801

Employee NPS = 10% × Basic = 8,621
CGHS = 650

Approx. Take-home = 92,530

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Summary — Ramakant

Item	7th CPC (₹)	8th CPC (₹)
Gross	80,970	101,801
Take-home	73,226	92,530

Ramakant gains substantially.
Although DA resets to zero, the higher basic and HRA more than compensate.

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Case 3 — Shanti

Scientist
Level 10
Posted in Z-City
Basic (7th CPC): ₹59,500
Experience: 2 increments (~2 years in post)

Under 7th CPC

Component	Amount (₹)
Basic	59,500
DA @ 58%	34,510
HRA @ 8%	4,760
TA = 3,600 × (1 + 58%)	5,688
Gross Salary	104,458

Employee NPS = 10% × (Basic + DA) = 9,401
CGHS = 1,000

Approx. Take-home = 94,057

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Under Exploratory 8th CPC

Component	Amount (₹)
Basic = 59,500 × 1.92	114,240
DA	0
HRA @ 8%	9,139
TA (slab)	3,600
Gross Salary	126,979

Employee NPS = 10% × Basic = 11,424
CGHS = 1,000

Approx. Take-home = 114,555

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Summary — Shanti

Item	7th CPC (₹)	8th CPC (₹)
Gross	104,458	126,979
Take-home	94,057	114,555

Even though HRA is low (Z-city) and DA resets, the higher basic still ensures a healthy rise in take-home and stronger retirement benefits.

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Comparative View

Name	Level	City	Take-home (7th)	Take-home (8th)	Difference
Aman	2	X	40,276	51,661	+11,385
Ramakant	7	Y	73,226	92,530	+19,304
Shanti	10	Z	94,057	114,555	+20,498

All three profiles see a notable improvement in take-home pay.
More importantly, the proportion of basic pay increases, improving long-term benefits such as increments, pension and NPS corpus.

Pension Implications Under the 8th CPC

The 8th Central Pay Commission is expected to affect not only serving employees but also a significant number of pensioners. In India, pension revision is directly tied to changes in basic pay, which means that the proposed fitment-based restructuring will play a central role in redefining post-retirement earnings.

How Pension Is Expected to Be Recalculated

Under the current system, pension revisions apply the same fitment factor used for serving employees. This means:

Revised Pension (8th CPC) = Existing Pension (7th CPC) × Fitment Factor

For illustration, if a pensioner currently receives a basic pension of ₹25,000, under a notional fitment factor of 1.92, the revised pension could be:

25,000 × 1.92 = ₹48,000

This revised basic pension becomes the foundation for subsequent Dearness Relief (DR), which, like DA for serving employees, will restart at zero when the new structure is implemented, then climb gradually with inflation.

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Family Pension

Family pension, generally 30% of basic pay, will similarly be recalibrated on the revised basic.
This ensures that surviving dependents receive the benefit of the reset.

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Dearness Relief Reset to Zero

Much like DA for serving employees, Dearness Relief (DR) for pensioners will reset to zero under the new commission. Growth thereafter will depend on future inflation adjustments. This ensures clarity and uniformity in the way relief is administered.

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Why This Matters

1. Higher Long-Term Security
   A higher starting basic pension provides a sturdier platform for retirement. Future DR increases compound on a stronger base.
2. Predictable Growth
   Resetting DR to zero eliminates legacy accumulation and starts a clean, predictable inflation cycle.
3. Alignment With Serving Employees
   Pensioners and employees move forward under the same logic, ensuring fairness and transparency.

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Practical Impact

For many pensioners, especially those who retired years ago, salaries and expenses have diverged. A revised basic pension offers a meaningful correction to this gap. It allows retirees to maintain financial stability and meet medical, household, and social expenses with less strain.

For some, this may translate into renewed dignity — fewer compromises on healthcare, better support for family events, and a greater sense of security.

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The Human View

While formulae describe how pensions change, the lived impact is more subtle:
a retired teacher paying for a grandchild’s school fee without worry,
a widowed spouse able to manage medical bills with grace,
a couple preserving their independence without leaning heavily on children.

The 8th CPC’s pension restructuring acknowledges not only years of service but also years beyond service years in which financial steadiness becomes the quiet backbone of a meaningful life.

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Frequently Asked Questions (FAQs)

1) Will the 8th CPC definitely be implemented?

The government has approved the Terms of Reference for the 8th Central Pay Commission, with implementation expected from 1 January 2026, subject to final recommendations and Cabinet approval.

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2) How many people will be affected?

The 8th CPC is expected to impact approximately 1.2–1.3 crore people, including:

• Central government employees
• Defence personnel
• Central government pensioners

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3) What is the fitment factor?

The fitment factor is a multiplier applied to current basic pay or pension to arrive at the revised 8th CPC basic.

Formula:
Revised Basic = Existing Basic × Fitment

In this article, we have used an illustrative factor of 1.92×.

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4) Will DA be reset?

Yes.
Dearness Allowance (DA) is expected to reset to zero at the start of the 8th CPC cycle.
It will then begin rising again with inflation.

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5) Is HRA being reduced?

No.
HRA is expected to return to its base slab:

• X City: 24%
• Y City: 16%
• Z City: 8%

Under the 7th CPC, higher slabs (30/20/10) were applied only when DA crossed certain thresholds.
With DA restarting at zero under 8th CPC, the enhanced slabs will no longer apply initially.
So this is a realignment, not a reduction.

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6) Will TA be reduced?

No.
TA will revert to base slab rates because DA resets to zero and will not be added to TA initially.

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7) Will pension increase?

Yes.
Pension is also revised by applying the same fitment factor used for serving employees.

Revised Pension = Existing Pension × Fitment

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8) Will pensioners get arrears?

This depends on the final notification.
Traditionally, pay commission awards have taken effect from a specified date (e.g., 1 January), and arrears were paid only if implementation was delayed. Final decision will rest with the government.

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9) Does the 8th CPC apply to state government employees?

No.
The CPC covers central government employees and pensioners.
States usually revise salaries later, using central recommendations as a reference, but through their own mechanism.

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10) Will the pay matrix change?

Most likely, yes.
Because Basic Pay is being re-anchored through a fitment multiplier, the pay matrix and cell values will be revised. Details will be known once the Commission submits its report.

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11) Will allowances like medical, children education allowance, etc., change?

Such allowances may be rationalised or adjusted; final decisions will depend on Commission recommendations.
Core allowances such as HRA and TA are expected to reset to their base structures, as explained.

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12) How will NPS be calculated under the 8th CPC?

With DA resetting to zero, NPS contributions are expected to be calculated on Basic only:

• Employee contribution: 10% of Basic
• Government contribution: 14% of Basic

This simplifies the structure.

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13) Why reset DA to zero?

Because DA reflects the loss of purchasing power since the last revision.
When the basic pay is revised upward via fitment, past inflation is already accounted for.
Therefore, DA begins again from zero to record future inflation only.

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14) Why re-anchor HRA and TA?

Because both had grown on the back of high DA.
With a new salary cycle beginning, retaining DA-inflated values would distort allowance structure.
Resetting them to base ensures clean, transparent computation and fairness.