The government employees are both excited and anxious to know about their salary structure under the 8th Pay Commission.
They want to know when the salary recommendations will be announced, what possible increments they are likely to receive, and how the Dearness Allowance (DA) will be calculated.
If sources are to be believed, it is being said that the government will reset the DA to zero by changing a decade-old rule.
What is the government’s master plan?
The calculation of DA is based on the figures of the All-India Consumer Price Index for Industrial Workers (AICPI-IW). The index has a base year, and inflation is compared against it.
Present Ruling
The base year for calculating DA is currently 2016. It was set when the 7th Pay Commission was implemented.
Proposed Changes
Now that the 8th Pay Commission is set to be implemented from January 1, 2026, the government may also change the base year for calculating DA to 2026.
Understand in Simple Terms
Changing the base year is like resetting the score. When the base year is revised, the calculation of the Dearness Allowance also starts afresh-that is, from zero.
Why is the Base Year Being Changed?
Over the past decade, people’s spending patterns, needs, and the nature of inflation have completely changed. The things we spend money on today are very different in comparison to 2016. Therefore, to assess inflation accurately and ensure employees receive its real benefit, it becomes necessary to update the base year.
What Will Change in DA Calculation?
Under the 7th Pay Commission (current system), the base year for DA calculation is 2016. When the 7th Pay Commission was implemented, the old DA of 125% was merged into the new pay scale, and the DA calculation started again from 0%. The calculation was based on the prices of 2016, which became the benchmark for measuring inflation. As a result, the basic salary increased.
In the proposed system of the 8th Pay Commission, the base year for DA calculation is likely to change to 2026. By January 2026, about 60–61% DA may be merged into the new pay scale. After that, the DA will again start from 0%, and the calculation will be based on the prices of 2026. This means that the new basic pay will rise even more than before.
How Will It Work?
Merger:
By January 1, 2026, your Dearness Allowance (DA) will have reached around 60–61%. Once the 8th Pay Commission is implemented, this entire DA will be added to your current basic salary. This will create your new basic salary, which will be significantly higher than before.
Reset:
As soon as the old DA is merged into your basic salary, the DA counter will reset to 0%. After that, any future increase in DA will be calculated on this new and higher basic salary.
