The government has announced the final dearness allowance (DA) hike of the year, taking the DA to 58% of basic salary, effective from July 1, 2025. Alongside this, the Centre has officially constituted the 8th Pay Commission and approved its Terms of Reference (ToR), giving the panel an 18-month deadline to submit its recommendations related to revised pay structure and other compensation elements.
Despite uncertainty about the exact date of implementation of the 8th Pay Commission, one clarity has been provided: central government employees will receive arrears from January 1, 2026, irrespective of when the new pay scales officially roll out.
Will DA, HRA and TA Continue to Increase During the 8th CPC Transition?
A key concern among employees is whether DA, house rent allowance (HRA), and transport allowance (TA) will continue to rise after December 31, 2025, or whether these increments will be paused until the 8th Pay Commission recommendations come into effect.
According to Ramachandran Krishnamoorthy, Director–Payroll Services at Nexdigm, the calculation of DA will continue under the 7th Pay Commission structure until the 8th CPC is fully implemented. This means DA hikes will keep being computed based on the current 7th CPC basic pay.
How Many DA Revisions Are Likely Before the 8th CPC Becomes Effective?
The government has given an 18-month window for the 8th Pay Commission to complete its report. Since DA revisions are announced twice a year, employees can expect three DA hikes during this 18-month period.
Krishnamoorthy explains that if the current DA is 58% and we take an approximate rise of 3% per cycle—purely as an illustrative estimate—the DA could increase as follows:
• After 6 months: 61%
• After 12 months: 64%
• After 18 months: 67%
He emphasises that the actual increase will depend on the Consumer Price Index (CPI) movement during the period.
Employees Anticipate Clarity on Allowances
Manjeet Singh Patel, National President of the All India NPS Employees Federation, also noted that employees are seeking clearer communication from the government regarding how HRA and TA will be treated during the transition period. Since these allowances are linked to basic pay and DA slabs, any delay in 8th CPC rollout may impact the timing of their revision.
What Lies Ahead
While employees are relieved that arrears from January 1, 2026, are guaranteed, the next 18 months will remain crucial. With three DA revisions likely before the new pay structure is adopted, the overall compensation trajectory for central government employees will continue to evolve until the 8th Pay Commission recommendations come into force.
