8th Pay Commission - Everything You Need to Know

8th Pay Commission - What is it?

The 8th Pay Commission is a proposed initiative by the Indian government to revise the salaries, allowances, and pension benefits for central government employees. Although the commission has not yet been officially established, it is anticipated to be implemented on January 1, 2026. This follows the tradition of instituting a new Pay Commission approximately every ten years to address the cost of living adjustments and inflation.

The 8th Pay Commission is expected to benefit millions of government employees and pensioners by potentially increasing the minimum salary and improving retirement benefits. However, as of May 2024, the Indian government has not made a formal announcement regarding the formation of the commission.

8th Pay Commission Date of Implementation

As of now, there is no official confirmation about the date of announcement or implementation of the 8th Pay Commission. However, it is expected that the government is already working on it and might announce the same in 2024 after the Central Elections. This is so because the government of India generally follows a 10-year gap between different pay commissions to take into account the increase in the cost of living.

The 8th Pay Commission is expected to be announced by the end of 2024 and implemented by January 1, 2026.

8th Pay Commission Overview

Given below is the overview of the 8th pay commission's latest news and updates -

8th Pay Commission Pay Matrix

Since there has been no official announcement about the 8th pay matrix, it is still not possible to expect the exact 8th pay commission salary increase. However, as per the history of the introduction of new pay commissions, the salary is expected to increase between 20% and 35% approximately. The table given below assumes the increase to be 25% and presents an expected salary increase after the implementation of the 8th pay matrix -

8th Pay Commission Benefits

The implementation of the 8th Pay Commission will have the following benefits both for the employees as well as the Indian economy -

• Increased Salaries - Central government employees can expect a basic salary increase of about 20% to 35%, which will improve their take-home pay. This rise in base salary will also ensure better living conditions and greater financial stability.
• Increased Allowances - Allowances such as House Rent Allowance (HRA), Transport Allowance (TA), and Dearness Allowance (DA) might be adjusted to reflect inflation and changing living costs.
• Boost Spending - With increased disposable income, government employees could boost their spending, thereby stimulating the economy through higher demand for goods and services.
• Improve Retirement Benefits - An estimated increase of up to 30% in pensions can provide better financial security post-retirement.
• Increase in Tax Revenue - Higher salaries may result in greater tax revenue for the government.
• Less Financial Stress - Improved financial stability among employees can lead to greater social stability and reduced reliance on social welfare programs.
• Attraction and Retention of Talent - Competitive compensation packages could make government jobs more attractive to skilled professionals, helping with talent acquisition and retention.

Salary Increase after 8th Pay Commission

The Fitment Factor, a numerical value, is the key element determining the conversion from old basic pay to new basic pay. It compares the pre-revised basic pay with the revised basic pay. Below are the Fitment Factors and additional details from the 4th to the 8th Pay Commission in India:

8th Pay Commission Eligibility

Just like the previous pay commissions, the 8th pay commission is applicable to all government employees, including -

• Central Government Employees - This includes all the employees currently working under the central government departments, ministries, etc.
• Central Government Pensioners - Retired employees who receive pensions from the Central government including family pensioners, are also eligible for the 8th pay commission.
• Defense Personnel - All individuals working for the Indian Armed Forces, i.e., army, navy, and airforce, might be included in the 8th Pay Commission of the Central Government.
• State Government Employees - State governments in India follow their own rule to pay the employees. The applicability of the 8th pay commission to the state government employees depends on the discretion of the state government.
• Public Sector Undertakings (PSUs) - Some PSUs follow the pay matrix of the central government, while the rest have their own payment mechanisms. Therefore, the inclusion of public sector undertaking employees under the 8th pay commission is subjective.

Regardless of when the 8th pay commission is implemented, increased salary also comes with more taxes and a greater need for planning them. For individuals whose annual income exceeds the basic exemption limit and certain specified individuals, filing an ITR is mandatory.

If you are someone who is eligible to file an ITR, you must file your ITR now to avoid penalties and notices. ITR filing for FY 2024-25 has started, and you can file your ITR with the help of expert CAs. Hire an online CA now!