8th Pay Commission: Delay Could Affect Allowances for Central Employees

The central government has formally constituted the 8th Pay Commission, and millions of employees are eagerly awaiting its recommendations. The 7th Pay Commission tenure ends on 31 December 2025, and the 8th Pay Commission is expected to start from 1 January 2026, although no official notification has been issued regarding arrears for central employees and pensioners.

Timeline and Implementation
In November 2025, the Ministry of Finance allotted the new pay commission 18 months to submit its report. Experts estimate that it could take an additional 6 months to implement the recommendations. This raises concerns about potential losses for employees and pensioners if the commission’s implementation is delayed.

Allowances Most Affected
According to reports, the primary allowances for most central employees include:

• Dearness Allowance (DA)
• House Rent Allowance (HRA)
• Transport Allowance (TA)
  Other fixed allowances such as Uniform Allowance and Children’s Education Allowance (CEA) are also applicable.

While these allowances are revised under the pay commission, arrears are paid only on basic salary, not on fixed allowances like TA, Uniform, or CEA.

Arrears That Do Not Accrue

• Dearness Allowance (DA): Employees do not receive arrears for DA because the final pay commission report integrates DA into the “fitment factor” of basic pay. DA is calculated as a percentage of basic salary and automatically increases with salary revisions.
• House Rent Allowance (HRA): According to Manjeet Singh Patel, National President of All India NPS Employees Federation, if the 8th Pay Commission is delayed, employees could lose thousands to lakhs of rupees in arrears for HRA. HRA is determined based on the city of residence, which is categorized into X, Y, and Z classifications.

Impact on Employees
A delay in the 8th Pay Commission may not affect DA directly, but allowances tied to city-based classifications, such as HRA, could result in significant financial impact. Employees are advised to stay updated on official announcements to understand the exact implications for their pay and arrears.