How 8th Pay Commission Will Change Salary & Pension Structure

8th Pay Commission salary calculator: How is salary of govt employees calculated, and what is fitment factor?

8th Pay Commission News: The central government has approved the terms of reference for the 8th Pay Commission, appointing Justice Ranjana Prakash Desai as chairperson. The commission will submit its report in 18 months, impacting salary and pension revisions through a fitment factor. This factor, a multiplier for basic pay and pension, will be determined considering various economic indicators.

The dearness allowance of an employee doesn't directly decide the fitment factor, but when a pay commission decides on the fitment factor, the DA rate, which is calculated on the basis of the basic pay, is also one of the key factors. The TOR (terms of reference) for the 8th Pay Commission have been approved by the central government. Additionally, they appointed former Supreme Court judge Justice Ranjana Prakash Desai to lead the Commission. In the upcoming 18 months, the commission will begin drafting its report and submit it. The Union Cabinet will examine and approve the report.

When the Cabinet approves a pay commission's recommendations, it also signs off on the fitment factor, which is a multiplier for salary and pension revisions for central government employees and pensioners.

How fitment factor changes salary

Manjeet Singh Patel, National President of the All India NPS Employees Federation, says that an employee's basic salary as per the previous pay commission is multiplied by the fitment factor to determine the basic pay in the new pay commission. For example, if a person is getting Rs 35,000 basic pay and the new fitment factor is 2.11, then the new basic salary will be Rs 73,850.

Ramachandran Krishnamoorthy, Director - Payroll Services, Nexdigm, says allowances such as HRA, which are calculated as a percentage of basic pay, will automatically increase once the new basic is notified. Fixed allowances like transport allowance are usually reviewed separately and may be revised within a few months after the 8th Pay Commission's recommendations are implemented.

Does DA play a role in determining the fitment factor?

The dearness allowance of an employee doesn't directly decide the fitment factor, but when a pay commission decides on the fitment factor, the DA rate, which is calculated on the basis of the basic pay, is also one of the key factors.

Patel explains:

• Current DA is 58%

• If DA rises by 12%, it will reach 70%

• Government calculates the growth factor (24% last time)

• Family units were 3 last time, may be 4 this time

• If family units rise to 4, another 13% increase is expected

• These factors together help derive the fitment factor

Patel says the impact of the fitment factor is on the basic salary and HRA, but at the same time, DA becomes zero in a new pay commission. So overall, the salary may increase by 20-25%.

Is fitment factor uniform for everyone? The 7th Pay Commission applied a uniform factor of 2.57. The 8th Pay Commission may continue the same approach, although lower-level employees may get a slightly higher factor as they have fewer promotional opportunities. Some pay levels may merge to simplify the pay matrix. Currently, there are 18 pay levels.

Example: If an employee earns a basic pay of Rs 50,000 and the 8th Pay Commission sets a fitment factor of 2.0, the new basic will be Rs 1,00,000. DA, HRA and transport allowance will be revised thereafter.

Pensioners will also get the same factor. For example, a pension of Rs 30,000 will become Rs 60,000 if the fitment factor is 2.0.

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8th Pay Commission salary calculation and approval timeline

Central government employees and pensioners anticipate higher salaries and pensions as the 8th Pay Commission's Terms of Reference are approved. The commission will submit a report in 18 months, with recommendations likely effective retrospectively from January 1, 2026.

According to reports, the 7th Pay Commission used a 2.57 fitment factor. The 8th Pay Commission factor will be known after the final report and government approval.

Example given again to understand calculation:

• Rs 35,000 is the basic salary

• 2.11 is the fit factor.

• New basic = Rs 73,850

Percentage-based allowances like HRA will rise when basic increases, while fixed benefits like transport allowance will be reviewed separately.

DA consideration again shown by experts:

• Current DA = 58%

• Expected rise = 12% → 70% DA

• Growth factor earlier = 24%

• Family units could increase from 3 to 4 → +13%

Total expected rise in salary: 20-25% for central employees. If the factor is 2.0, a Rs 50,000 basic salary becomes Rs 1,00,000 and pensions like Rs 30,000 become approx Rs 60,000.

Conclusion

The fitment factor is the main factor in the calculation of salary and pension changes for central government employees and pensioners, which will be decided by the 8th Pay Commission. Existing basic pay from the 7th Pay Commission will be multiplied by the new factor, influencing HRA and other allowances, while DA resets to zero. Based on DA, growth factor and family units, a 20-25% total salary rise is expected. The final fitment factor and actual hike will be confirmed only after the commission submits its report and the government approves it.