Centre Clarifies 8th Pay Commission Update: No Plan To Merge DA With Basic Pay

The central government has stated in Parliament that it is not examining any proposal to merge any portion of the dearness allowance with the basic pay of central government employees. The clarification was issued in a written reply by minister of state for finance Pankaj Chaudhary in the Lok Sabha on December 1, coinciding with the start of the Winter Session. This update comes shortly after the government released the Terms of Reference for the Eighth Central Pay Commission.

According to the government, DA and DR rates are revised every six months to offset inflation and ensure that salaries and pensions do not lose value due to rising living costs. These revisions are based on the All India Consumer Price Index for Industrial Workers prepared by the Labour Bureau. Several employee unions have recently urged the Centre to merge 50% of DA with basic pay to increase salary levels ahead of the 8th Pay Commission’s recommendations, which are expected only after 2027.

The Union Cabinet approved the Terms of Reference for the 8th Pay Commission on October 28. The panel, led by former Supreme Court judge Ranjana Prakash Desai, is expected to submit its recommendations within 18 months, with the revised pay structure likely to take effect from January 1, 2026. The Commission will review salaries, allowances, retirement benefits, and service conditions for nearly 50 lakh central government employees. Pay commissions are typically set up once every decade, and their recommendations guide major changes to government pay structures.