The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Terms of Reference (ToR) for the 8th Central Pay Commission (CPC). The latest revision is poised to revise the salaries, allowances and pensions of Central Government employees and retirees.
The Cabinet decision was announced by Union Minister for Information and Broadcasting Ashwini Vaishnaw.
The Pay Commission will submit its recommendations within 18 months of its constitution, with January 1, 2026 fixed as the effective date when the revised norms will come into effect in the decadal pay revision cycle.
The Central Pay Commission will formulate its recommendation on the basis of several critical factors such as economic conditions and fiscal prudence, resources for developmental and welfare expenditure, the financial burden of non-contributory pension schemes, and the potential financial impact on State Governments, many of which usually implement Central Pay Commission recommendations with minor modifications.
As per an official release by the Press Information Bureau (PIB), the 8th CPC will be a temporary body comprising one Chairperson, one Part-Time Member and one Member-Secretary.
The Commission may, if necessary, issue interim reports on specific recommendations as and when they are finalized. The CPC will also examine prevailing emoluments, benefits and working conditions in Central Public Sector Undertakings and the private sector to ensure balanced parity.
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The 8th CPC had been announced by the Government in January 2025 to review and recommend revisions in pay and service conditions of nearly 50 lakh Central Government employees and around 65-69 lakh pensioners, in line with the long-established practice of constituting a Pay Commission roughly every ten years; the 7th CPC was formed in February 2014 and implemented from January 1, 2016.
Minister of State for Finance Pankaj Chaudhary had earlier informed Parliament that the implementation of the revised pay structure would be undertaken after the Commission’s recommendations are finalized and accepted by the Government.
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While the specific multiplier applied to basic pay and pension has not been disclosed, reports suggest it may be under consideration.
Historically, the implementation of Pay Commission recommendations has had a significant fiscal impact. The 7th CPC, for instance, added a burden of over ₹1.02 lakh crore on the exchequer in FY 2016-17. However, the periodic pay revision is viewed as an important mechanism to offset inflation and boost consumption through increased disposable income among government employees.
With the Terms of Reference now approved, the 8th Central Pay Commission is expected to commence its deliberations shortly and submit its report by mid-2027, following which the Union Government will take a final call on implementation.