8th Pay Commission Pay Matrix & Fitment Factor: 92% To 338% Jump In Salary? DA, Arrears & Tax Rules Update

The 8th Pay Commission's implementation is much awaited by nearly 1.2 crore of central government employees and pensioners. However, the 8th CPC which was expected to be implemented from 2026 onward after 7th CPC ended last year, has been delayed. The 8th CPC committee has been formed to decide salary and pension hikes, while the majority are now predicting the new revised pay structure and fitment factor under the 8th CPC to be fully in place by mid-2027.

For 8CPC, the fitment factor is pivotal to deciding how much of an increase employees will get in their salaries and pensioners in their monthly pensions. Apart from this, there are expectations of allowance benefits, arrears and tax implications.

8th Pay Commission DA & DR Calculation:

In the latest development, the All India Defence Employees' Federation (AIDEF) is seeking revision in dearness allowance and dearness relief calculation for basic pay.

The government generally revises DA twice every year for a six-month period, which is broadly to adjust against inflation to improve the cost of living of government employees.

However, the defence federation believes the All India Consumer Price Index-Industrial Workers (AICPI-IW), which is pivotal for calculating DA and DR, was revised in 2022-23 and does not capture the impact of rising food commodity prices and agricultural products precisely. They highlighted that food and beverages hold 36.75% weightage in the revised CPI basket, compared to 45.86% weightage in 2012 base year index.

Furthermore, the federation has demanded the revision in CPI basket to give greater weightage to segments like housing, healthcare, transport, communication, recreation and digital services.

The formula for dearness allowance varies for central government and central PSU employees.

Central Government Employees: ((Average of All-India Consumer Price Index (with the base year 2001 = 100) for the past 12 months - 115.76) / 115.76) * 100

Central PSU Employees: ((Average of All-India Consumer Price Index (with the base year 2001 = 100) for the past 3 months - 126.33) / 126.33) * 100

The current DA is at 60%, which was hiked in April 2026 from an earlier 58%.

Under the 7th Pay Commission, the minimum salary is Rs 18,000 per month. At 58% DA, the minimum salary would have jumped by Rs 10,440 to Rs 28,440 (Rs 18,000 x 58/100) compared to the minimum pay of Rs 18,000.

But at 60%, the minimum salary would rise by Rs 10,800 to Rs 28,800 (Rs 18,000 + 60/100) compared to the minimum basic pay.

Notably, DA under 7th CPC is not expected to be carry forward in 8th CPC. It will change alltogether!

8th Pay Commission Arrears:

As per reports, if 8th Pay Commission is implemented by mid-to-late 2027 but the pay is revised with effect from January 1, 2026, then many employees will be eligible for approximately 20-24 months of arrears.

If we take into consideration a 1.92 fitment factor for the 8th Pay and 24-months of arrears, the amount would range from Rs 2 lakh to nearly Rs 17 lakh. However, the benefits would depend upon employees and their grade levels.

Pay Level	Current Basic	24-month retro	30-month retro
Level 1	₹18,000	₹2.0-2.3 L	₹2.6-2.9 L
Level 4	₹25,500	₹3.3-3.7 L	₹4.2-4.8 L
Level 5	₹29,200	₹3.7-4.2 L	₹4.8-5.4 L
Level 6	₹35,400	₹4.5-5.0 L	₹5.7-6.4 L
Level 7	₹44,900	₹5.6-6.3 L	₹7.2-8.0 L
Level 8	₹47,600	₹5.9-6.7 L	₹7.6-8.5 L
Level 10	₹56,100	₹7.2-8.1 L	₹9.3-10.3 L
Level 11	₹67,700	₹8.6-9.6 L	₹11.0-12.3 L
Level 12	₹78,800	₹9.9-11.1 L	₹12.7-14.2 L
Level 13	₹1,23,100	₹15.2-16.9 L	₹19.5-21.7 L
Level 14	₹1,44,200	₹17.8-19.7 L	₹22.8-25.3 L

{Image Source: Indian Pay Calculator}
{Formula: Net arrears at 1.92× fitment factor, X-class HRA, higher TPTA city, current 60% DA}

8th Pay Commission Tax Rules:

The arrears, if credited under the 8th CPC, will become a taxable income for employees. However, the Section 89(1) relief is expected to be implemented under the 8th CPC just like previous pay commissions, where an employee can claim tax benefits and avoid paying additional tax just because of the large-sum one-time arrears payment.

For claiming this tax benefit, employees will need to file Form 10E. Notably. whether Section 89 relief remains available under all circumstances of the new tax regime should be verified when the final arrears notification is issued. Official guidance is still awaited.

8th Pay Commission Fitment Factor Predictions:

Fitment factor is important in deciding the basic salary matrix under the 8th Pay Commission. Fitment factor is the multiplying tool that is applied to basic pay. Formula: 8th Pay Basic Pay = 7th Pay Basic Salary X Fitment Factor.

At present, the lowest predicted fitment factor under the 8th Pay Commission is 1.92, while the highest estimate is 3.83. However, recently, the Indian Railway Technical Supervisors' Association (IRTSA), has recommended different fitment factors depending upon pay grade of employees, to which, the highest prediction is of 4.38. Also, the Bharatiya Pratiraksha Mazdoor Sangh has suggested fitment factor of 4 to Rs 72,000 minimum pay.

8th Pay Commission Salary Hikes:

If we take into consideration a fitment of 1.92 to 3.83, the basic pay under the 8th Pay Commission could rise by 92% to range from Rs 34,560 to Rs 68,940 per month compared to the current basic pay. The current basic pay is Rs 17,000 under 7CPC.

If we take into consideration 4.38 fitment, the basic pay for level 17 grade employee is reportedly around Rs 2.25 lakh per month under 7th CPC. Once 8th CPC at 4.38 fitment is implemented, the salary could rise by 338% to Rs 9,85,500 per month.

However, at fitment factor 4, the basic salary for level 1 grade employee could rise by 300% from Rs 18,000.

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