Final Salary Hike Under 7th Pay Commission Coming Soon; How Will It Benefit 1 Crore Employees?

In a major development for nearly one crore central government employees and pensioners, a fresh hike in Dearness Allowance (DA) and Dearness Relief (DR) might be announced soon for July 2025. This increase, which will be the final one under the 7th Pay Commission, is likely to be implemented from July but credited to bank accounts by October, just ahead of the festive season. The 7th Pay Commission was implemented in January 2016 and will end in December 2025. Around 33 lakh employees and 66 lakh pensioners are expected to benefit from the revision.

Earlier in March 2025, the central government had increased DA by 2%, raising it from 53% to 55% of the basic salary. This allowance plays a crucial role in mitigating the impact of inflation on employees' incomes. DA is considered a vital component of government salaries, helping workers maintain purchasing power despite rising costs of living. The upcoming hike aims to provide financial cushioning amid economic fluctuations. With this being the last revision under the current structure, attention has now turned to what changes the next commission may bring to government compensation.

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The 8th Pay Commission will roll out tentatively from January 2026. Once the 8th Pay Commission is implemented the DA will reset to zero, as the calculation base index will change. For example, prior to the 7th Pay Commission, DA had surged to 125% of basic salary. Ambit Capital estimates that if DA touches 60% before the 7th Pay Commission ends, salaries may rise by approximately 14% under the new structure. However, this projected increase would be the smallest in comparison to the previous four pay commissions, which had delivered more substantial jumps in employee pay scales over the years.

As of now, the government has not taken any formal steps toward initiating the 8th Pay Commission. No official notification has been released, and no members have been appointed to the commission so far. Experts suggest that even if it is announced in time, the actual implementation may take 1.5 to 2 years due to administrative processes. This delay could lead to employees receiving arrears for the intervening period once the new pay structure is finally rolled out. Until then, the final DA revision under the 7th Pay Commission remains a key financial relief for central government workers.