The Cabinet on Tuesday approved the terms of reference of the 8th Pay Commission which will benefit 50 lakh central government employees and 69 lakh pensioners and will have implications on the emoluments of the staff of state governments. According to the news agency PTI report the recommendations of the Commission to be headed by former Supreme Court judge Ranjana Prakash Desi are likely to be effective from January 1 2026. It is to be noted that the commission will submit its report in 18 months and interim reports as and when they are finalised.

As per an official statement the commission will look into the prevailing emolument structure benefits and working conditions available to employees of Central Public Sector Undertakings and private sector while finalising its recommendations.

Once the Cabinet endorses the recommendations of any pay commission the Cabinet also ratifies the fitment factor. The fitment factor is a multiplier used to increase salaries and pensions for central government employees and pensioners. This is expected to affect more than one crore central employees and pensioners in India.

The fitment factor was 2.57 under the 7th Pay Commission. We will have to wait and see what the fitment factor for the 8th Pay Commission will be. But just what is the fitment factor and how does it relate to increasing salaries and pensions? How do we arrive at the fitment factor? And does the DA factor into it? For example if the 8th Pay Commission fitment factor is set at 2.0 how much of an increase will salaries and pensions get? Let’s understand it in simple terms.

According to an Economic Times report Manjeet Singh Patel National President of the All India NPS Employees Federation said the formula for the pay commission system is simple.

A persons basic salary as per the old pay commission is multiplied by the new fitment factor to derive the new pay commission basic pay. For example if the basic pay is Rs 35000 and the new fitment factor is 2.11 the new basic pay under the new pay commission will be Rs 73850.

As per Economic Times report Ramachandran Krishnamoorthy Director Payroll Services at Nexdigm stated that allowances tied to basic pay (House Rent Allowance (HRA) for example) will automatically increase as soon as the new basic pay is taken up. Fixed allowances (e.g. transport allowance) are generally considered in a different context and in that case may be revised at a few months after the 8th Pay Commissions recommendations are implemented.

Although the Dearness Allowance (DA) does not determine the fitment factor it is an integral part of the calculation process. When a pay commission settles on the fitment factor it considers the current DA rate which is based on the employee’s basic pay as a key element in deciding the overall salary revision.

Patel illustrates this by means of an example: if the DA is currently at 58% and it increases by 12% by the time the recommendations of the 8th Pay Commission are formally accepted the DA would reach a level of 70%.


In addition to the DA the government also computes the growth factor which had been 24% in the previous recommendation. While determining the fitment factor the pay commission also takes into account family units — which was 3 last time and could be 4 this time. If 4 family units are considered it could result in an additional 13% increase. In essence the fitment factor is a combination of all these components.

Patel further clarifies that the fitment factors primary influence applies to the basic salary and HRA. However when a new pay commission is introduced the DA is reset to zero. Taking these changes into account the overall salary could be increased in the range of 20-25%.