8th Pay Commission: Employees are expecting that by January 1, 2026, their DA will be around 61%. When the 8th Pay Commission comes, this entire 61% will be added to their basic pay, which will create a big ‘revised basic pay’. Then the fitment factor will be applied on it. But the real story can be something else.
8th Pay Commission: 8th Pay Commission… On hearing this word, the calculator of their increased salary starts spinning in the minds of crores of central employees. Till now the general belief was that when the 8th Pay Commission comes into effect on January 1, 2026, all the Dearness Allowance (DA) till that date will be merged in the basic pay and then the new salary will be formed by applying the fitment factor on it.
But now a big and shocking twist is seen coming in this story. If sources and experts are to be believed, the government is not in the mood to merge the entire 60-61% DA. It is possible that contrary to your expectations, only 50% DA is included in the basic pay. If this happens, it will change the entire math of your salary. What is this new twist and why can the government do this? Let’s investigate this whole matter in depth.
What is the general expectation and where is the twist?
Employees are expecting that by January 1, 2026, their DA will be around 61%. When the 8th Pay Commission comes, this entire 61% will be added to their basic pay, which will create a big ‘revised basic pay’. Then the fitment factor will be applied on it. But the real story may be something else.
Twist in the story: Why only 50% DA merged, not 61%?
This angle is shocking, but some solid arguments are being given behind it.
1. 50% DA ‘rule’
An established rule says that whenever DA touches the level of 50%, it should be merged with the basic salary. DA became 50% in January 2024 itself, but the government did not merge it then. Experts believe that the government has deliberately held back this merger for the 8th Pay Commission and it can make this 50% benchmark the basis, not 61%.
2. Example of 7th Pay Commission
When the 7th Pay Commission was implemented in 2016, even then the government had merged the total DA of that time and calculated it. Also, the base year was also changed. Due to this, the government had to bear the financial burden. But, something different is being thought of for the calculation this time.
3. Financial discipline of the government
This is the biggest reason. If the government merges the entire 61% DA, then the revised basic-pay of the employees will increase a lot. On this increased basic, allowances like HRA, TA will also increase in the same proportion, which will put a huge burden on the government treasury. By merging only 50% DA, the government can control this financial burden to a great extent.
Understand the whole game with mathematics: How much will it affect your pocket?
Let us see from a comparative table that if 61% DA is merged and if only 50% DA is merged, then how big will be the difference in your revised basic-pay, on which the fitment factor will be applied later.
| Existing Basic Pay | Scenario A: If 61% DA is merged (employees’ expectation) | Scenario B: If 50% DA is merged (possible step by the government) | Difference (impact on your pocket) |
| ₹30,000 | ₹30,000 + ₹18,300 = ₹48,300 | ₹30,000 + ₹15,000 = ₹45,000 | ₹3,300 less |
| ₹50,000 | ₹50,000 + ₹30,500 = ₹80,500 | ₹50,000 + ₹25,000 = ₹75,000 | ₹5,500 less |
| ₹80,000 | ₹80,000 + ₹48,800 = ₹1,28,800 | ₹80,000 + ₹40,000 = ₹1,20,000 | ₹8,800 less |
This difference is only of the revised basic-pay. When a fitment factor of 1.92 or more will be applied on it, then this difference in the final salary will become even bigger.
Is changing the base year a part of this ‘game’?
There is another important angle in this story – changing the base year.
What is the situation now
Currently the base year for calculating DA is 2016 = 100.
What can happen
There is a very strong possibility that with the implementation of the 8th Pay Commission, the government will change the base year to 2026=100.
If the base year changes, the entire method of calculating DA will be reset. In such a situation, there will be no technical basis left to merge 61% DA and it will be easy for the government to argue that a new beginning is being made by merging the 50% benchmark.
What is the government’s ‘master plan’? Base year will change
Dearness Allowance (DA) is calculated on the basis of Consumer Price Index for Industrial Workers (AICPI-IW). This index has a ‘base year’, on the basis of which inflation is compared.
Existing regulations
Currently, the base year for calculating DA is 2016. It was set when the 7th Pay Commission was implemented.
Proposed changes
Now when the 8th Pay Commission is to be implemented from January 1, 2026, the government can also change the base year for calculating DA to 2026.
Understand this in easy language
Changing the base year is like resetting the score of a game. When the base year is new, the calculation of dearness allowance also starts afresh, i.e. from ‘zero’.
Why is the base year being changed?
In the last decade, people’s spending habits, their needs and the nature of inflation have completely changed. The things we spend on today are very different from 2016. Therefore, it becomes necessary to update the base year to assess inflation correctly and give real benefits to employees.
7th vs 8th Pay Commission: What will change in DA calculation?
Let us understand with a table what will be the difference between the existing system and the new possible system.
| Parameters | 7th Pay Commission(Existing System) | 8th Pay Commission(Probable System) |
| Base year of DA | 2016 | 2026 (Expected) |
| What happened to the old DA? | 125% DA merged into basic salary. | 60-61% (estimated) DA will be merged into the new basic salary. |
| Beginning of DA | Starting from 0%. | Will start from 0%. |
| Basis of calculation | Based on 2016 prices. | Based on 2026 prices. |
| Final result | Basic salary increased, total salary increased. | The new basic salary will increase even more, there will be a big jump in the total salary. |
How will this work?
1. First step – Merger
By January 1, 2026, your dearness allowance will have reached about 60-61%. As soon as the 8th Pay Commission is implemented, 50% of this DA will be added to your existing basic salary. This will form your ‘new basic salary’, which will be much higher than before.
2. Step 2 – Reset
As soon as the old DA is added to your basic salary, the DA counter will be reset to 0%. After this, whatever increase in dearness allowance will be made, it will be calculated on this new and increased basic salary.
Understand by example
The same thing happened in the 7th Pay Commission. When it was implemented in 2016, the dearness allowance of 125% was merged into the basic pay and DA was made zero.
What will be the effect on your salary? (The Real Impact)
This change is beneficial for you. Why? Because when your future DA (eg 2%, 3%, 4%) is calculated on your new and higher basic salary, the amount you will receive will also be higher. This will increase your total salary even faster over time.
When will the 8th Pay Commission be implemented?
Formation of panel: The government can constitute the panel of the 8th Pay Commission by the end of the year 2025.
Report: The panel takes 15 to 18 months to give its recommendations. It is estimated that the report may come by March 2027.
Implementation: Whenever the recommendations come, it is expected to be implemented from 1 January 2026. That is, you will also get the benefit of arrears.
Conclusion: Useful information for you
The simple picture that was visible regarding the 8th Pay Commission is not that simple now. It is quite possible that the government, citing financial discipline and rules, merges only 50% DA in the basic pay, contrary to the expectations of the employees. Although the final decision will be taken by the government based on the recommendations, the employees should now be mentally prepared for this new equation. It is certain that the salary will increase, but how much, the answer to this is now stuck in the complications of these new rules.
Frequently Asked Questions (FAQs)
Q. What is the 50% rule of DA merger?
A. This is an old rule according to which when dearness allowance reaches 50%, it should be merged with the basic salary.
Q. If only 50% DA is merged, will the employees suffer loss?
A. Yes, this will reduce their revised basic pay, which will also impact their final salary.
Q. What does changing the base year mean?
A. This means that the calculation of dearness allowance will start from a new base year, thereby resetting the DA percentage.
Q. Has the government given any official statement on this?
A. No, as of now this is only an analysis based on experts and sources.
Q. So what should employees expect now?
A. Employees should expect a good salary hike, but at the same time they should also be prepared for this new equation.
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