8th Pay Commission: Central Govt Employees May Get 13% Salary Hike, Says Kotak Report

The 8th Pay Commission, which is responsible for revising the salaries and pensions of central government employees, had received Cabinet approval in January but has not yet been officially formed. A new report by Kotak Institutional Equities shares fresh insights into what employees can expect when it is implemented. 

8th Pay Commission: Salary Hike Likely to be 13%

According to the Kotak report, central government employees may get an effective salary hike of around 13% under the 8th Pay Commission. This is slightly lower than the 14.3% hike that was given during the 7th Pay Commission.

8th Pay Commission: Fitment Factor May Be 1.8

The fitment factor is the number used to calculate the new basic pay. Kotak expects this to be 1.8, which is nearly 30% lower than the 2.57 factor used in the 7th Pay Commission.

If 1.8 is applied, the minimum basic salary of ₹18,000 could rise to ₹32,000. Similarly, a salary of ₹50,000 may rise to ₹90,000. However, the actual increase in total take-home pay would be smaller due to the reset of the Dearness Allowance (DA) to zero.

8th Pay Commission: Dearness Allowance Impact

Currently, DA is 55% of basic pay and is revised every six months. For example, an employee earning ₹18,000 gets ₹9,900 as DA, taking their total to ₹27,900. News reports from NDTV Profit suggest that after the 8th Pay Commission, since DA will restart from zero, the real salary increase will be modest.

8th Pay Commission: When Will the Hike Come?

The salary hike is expected to come into effect from FY27 or FY28. The Commission will consult stakeholders and take time to draft recommendations.

8th Pay Commission Cost to the Government

The 8th Pay Commission is expected to impact 3.3 million central government employees, with a major share going to Grade C workers. The total cost to the government could be between ₹2.4 lakh crore and ₹3.2 lakh crore.

Read more: Income Tax Department Sets Sept 30, 2025 as Deadline for TDS/TCS Relief on Inoperative PANs.

Conclusion

While the fitment factor of 1.8 may boost basic pay figures, the actual benefit to employees may be smaller when adjusted for allowances. Still, the move is expected to help millions of employees, especially those in lower grades, and boost overall consumption in the economy.

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