8th Pay Commission Latest News: Will DA/DR merge with basic pay? Finance Ministry responds. Read here

Amid rising expectations for salary and pension revisions, the Ministry of Finance answered a question in Lok Sabha on December 1, 2025, regarding the constitution of the 8th Central Pay Commission (CPC) and the possibility of merging Dearness Allowance (DA) and Dearness Relief (DR) with basic pay/pension.

According to the Ministry’s reply on the first day of the Winter session, the Government has issued a notification on 3rd November 2025, constituting the 8th Central Pay Commission. The members of the Commission are:

• Chairperson: Smt. Justice Ranjana Prakash Desai

• Member (Part-Time): Prof. Pulak Chosh

• Member-Secretary: Shri Pankaj Jain

The Commission’s Terms of Reference include reviewing pay, allowances, pensions, bonuses, and other benefits for Central Government employees, All India Services, Defence personnel, Union Territories staff, regulatory bodies, and judicial officers. It will also recommend measures to attract talent, promote efficiency, and maintain fiscal prudence. The Commission is expected to submit its recommendations within 18 months.

Will DA/DR merge with basic pay?

Regarding the merger of DA/DR with basic pay/pension, the Ministry clarified that no proposal is under consideration at present. Dearness Allowance is revised every six months based on the All India Consumer Price Index for Industrial Workers (AICPI-IW) to protect employees’ and pensioners’ real income from inflation.

Historically, central pay commissions merge DA/DR with basic pay/pension when submitting final recommendations. The 7th Pay Commission followed this practice, and the 8th CPC is expected to follow the same convention once it calculates revised salaries and pensions.

What is Dearness Allowance (DA)?

DA is a cost-of-living adjustment designed to protect real pay against inflation. It is calculated as a percentage of basic pay based on CPI-IW increases over a fixed base value.

The Union Government has notified the Terms of Reference (TOR) of the 8th Pay Commission. The 8th Pay Commission is expected to submit its recommendations in 12-18 months. Meanwhile, several employee unions and pensioners' bodies have raised multiple concerns around the existing TOR.

Taxpayers and pensioners can now follow the 8th CPC developments closely, as the final recommendations will determine revised pay, allowances, and pensions, including any potential DA/DR merger.