8th Pay Commission: Govt expects financial implication only in 2026-27

The Budget for 2025-26 did not include any extra expenses for the 8th Pay Commission, as the report is expected to take another year to be prepared and approved, said Expenditure Secretary Manoj Govil.

The Finance Ministry has asked the Ministry of Defence, Ministry of Home Affairs, and the Department of Personnel and Training to suggest terms of reference for the Commission. After these terms of reference or guidelines are finalized, the government will approve them. Once approved, the 8th Pay Commission will start its work, Govil added.

"Earlier Pay Commissions have taken more than a year to submit their report. If the 8th Pay Commission is set up in March 2025, its report may be ready by March 2026. However, it could take less than a year as well. So, for the financial year 2025-26, we do not expect any financial impact from the 8th Pay Commission," Govil told Moneycontrol in an interview.

Last month, Prime Minister Narendra Modi approved the formation of the 8th Pay Commission for central government employees. The current 7th Pay Commission, which decides salaries and benefits, will continue until 2026.

Pay Commissions are formed every 10 years to review and recommend changes in the salary structure of government employees.

When asked if the government has estimated the extra cost after implementing the 8th Pay Commission, Govil said that the Commission will decide based on the economic conditions at that time.