8th CPC: Indications Suggest Merger of DA, DR With The Respective Basic Pay

Sources in the government said that the move, which will be effective from January 1, 2026, is going to ensure higher salaries, better pensions, and a simpler pay structure.

The 7th Pay Commission concludes on December 31, 2025.

The central government workforce has been anticipating a potential overhaul in the pay structure, as the 8th CPC is expected to bring in transparency, boost employee morale, and streamline pension calculations.

The DA provides a vital cushion for the cost of living for government employees and pensioners by offsetting inflationary impact. It is revised twice a year based on the Consumer Price Index for Industrial Workers (CPI-IW).

As of July 2025, the DA and DR stand at 58 per cent, and are projected to exceed 60 per cent by January 2026.

Awaiting Announcement  

Since the 5th CPC, when the DA exceeds 50 per cent, it would be merged with the basic pay. However, the 7th CPC did not apply this method, and the employees and pensioners alike have been looking forward to an announcement with regard to this in the 8th CPC.  

The 8th CPC, scheduled for implementation from January 1, 2026, is expected to introduce the merger of DA with basic pay, effectively resetting DA to zero and recalculating salaries using a revised fitment factor in the range between 1.83 and 2.86.

Experts say that the 8th CPC recommendations will be aligned with a compensation mechanism, keeping in view the requirements of modern administrative structure and fiscal management standards of the government.

The pay commissions are important for the employees and pensioners because they decide on the salary increases for current employees, pension hikes for retirees, allowances, and other benefits, besides long-term financial security.

Ahead of constituting the 8th CPC, the government has been conducting a massive mapping exercise to understand its own structure better, say sources.