7th Pay Commission: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a 3% increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners. Effective from July 1, 2025, this revision increases the DA and DR by 3 per cent. Currently, DA stands at 55% of basic pay. This will be increased to 58%.
Employees will receive arrears for July, August, and September along with their October salaries just before Diwali. A significant salary increase will encourage employees and pensioners to indulge in festive shopping. This increase will apply to all central government employees covered under the Seventh Pay Commission, as well as pensioners and family pensioners. Experts had expected a 3% increase in DA this time, amid a cooling inflation trend.
Second Major Hike in 2025
A major increase in dearness allowance (DA Hike) and dearness relief (DR Hike) for central government employees and pensioners has been announced before Diwali. This is the second increase in dearness allowance (DA) this year. The government revises dearness allowance twice a year.
In March 2025, DA and DR was raised by 2 per cent, raising the 53 per cent to 55 per cent of the basic pay and pension.
How much will the salary increase?
An employee with a basic salary of ₹30,000 will receive an additional ₹900 per month, while an employee with a salary of ₹40,000 will receive an additional ₹1,200. Over three months, the arrears will total ₹2,700 to ₹3,600. This will be a significant relief during the festive season.
Benefits to Crores of Employees
Following this Cabinet decision, all central government employees and pensioners will receive the gift of an increase in dearness allowance. This will benefit 4.8 million employees and 6.8 million pensioners or former employees.
DA Hike depends on CPI-IW data
The DA hike is usually announced twice a year, in February–March and in September–October, with effect from January and July of that year. It is meant to help employees manage the rising cost of living due to inflation. This revision is expected to be the final one under the Seventh Pay Commission. The 8th Pay Commission may be implemented from January 2026.
When will the 8th Pay Commission take effect?
According to National Confederation of Government Employees, the commission is expected to be effective from January 1, 2026. Under this, new salary structures and allowances will be implemented for central government employees and pensioners.
Will there be a Salary Increase for the government employees and pensioners?
The 8th CPC will be replacing the 7th pay commission, hiking the salaries and pensions of the employees. The implementation of the 8th Pay Commission is expected to be majorly in 2026; however, the possibility of delay is also on the cards. The key proposal in 8th CPC, which is expected from January 2026, will impact over 1 crore employees and pensioners. The key proposal is to raise the fitment factor from 2.57 in the 7th CPC to 2.86. If approved, the minimum salary of the central government employees could increase from Rs 18,000 to Rs 51,480 and the minimum pension from Rs 9,000 to Rs 25,740. This will be in addition to hikes in allowances like DA, HRA, and TA.
Impact on crores of employees
Approximately 5 million central government employees and 6.5 million pensioners will benefit from its implementation, as it will result in a 30-34 percent increase in salaries and pensions. Overall, approximately 11.5 million people will directly benefit from this. It is estimated that the new fitment factor could be between 1.83 and 2.86, which will directly impact employees’ basic salaries. The government has approved the 8th Pay Commission, but the formal establishment of the commission and the notification of its terms of reference (ToR) are yet to be issued. The minimum basic pay for Level 1 employees could be revised to ₹51,480, while the minimum pension could increase by approximately ₹20,500 to ₹25,740.
ALSO READ: RBI Policy Meeting 2025: RBI keeps repo rate unchanged at 5.5 percent
