8th Pay Commission: Big news on dearness allowance - not 60, 61%, only 50% DA will be merged before becoming '0'..

8th Pay Commission: The mere mention of the term "8th Pay Commission" sends millions of central government employees scurrying to calculate their salary increases. Until now, the general belief was that when the 8th Pay Commission comes into effect on January 1, 2026, all Dearness Allowance (DA) up to that date would be merged into the basic pay, and then the new salary would be determined by applying the fitment factor.

The entire DA will not be merged.

Now, a major and surprising twist appears to be coming to this story. Sources and experts suggest that the government is not in the mood to merge the entire 60-61% DA. Contrary to your expectations, only 50% DA may be included in the basic pay. If this happens, it will change the entire calculation of your salary. What is this new twist, and why might the government do this? Let's delve deeper into this matter.

What is the general expectation, and where is the catch?

Employees are expecting their DA to reach approximately 61% by January 1, 2026. When the 8th Pay Commission is implemented, this entire 61% will be added to their basic pay, creating a larger "revised basic pay." A fitment factor will then be applied. But the real story may be different.

A twist in the story: Why only 50% DA, not 61%, is merged?

This angle is surprising, but there are some solid arguments behind it. 1. The 50% DA 'Rule': An established rule states that whenever DA reaches 50%, it should be merged into the basic salary. DA reached 50% in January 2024, but the government did not merge it then. Experts believe that the government deliberately withheld this merger for the 8th Pay Commission and may use this 50% benchmark as the basis, not 61%. 2. The example of the 7th Pay Commission: When the 7th Pay Commission was implemented in 2016, the government calculated the DA by merging the total DA at that time. Furthermore, the base year was changed. This created a financial burden for the government. However, this time, something different is being considered for the calculation. 3. Government financial discipline is the biggest reason. If the government merges the entire 61% DA, the revised basic pay of employees will increase significantly. Allowances like HRA and TA will also increase proportionately on top of this increased basic pay, putting a significant burden on the government treasury. By merging only 50% of the DA, the government can significantly control this financial burden.

How much will it impact your pocket?
Let's use a comparative table to see how much difference there will be in your revised basic pay if 61% DA is merged and if only 50% DA is merged, which will then be factored in by the fitment factor. Current Basic Pay Scenario A: 61% DA merger (Employees' expectation) Scenario B: 50% DA merger (Government's likely move) Difference (Impact on your pocket) ₹30,000 ₹30,000 + ₹18,300 = ₹48,300 ₹30,000 + ₹15,000 = ₹45,000 ₹3,300 less ₹50,000 ₹50,000 + ₹30,500 = ₹80,500 ₹50,000 + ₹25,000 = ₹75,000 ₹5,500 less ₹80,000 ₹80,000 + ₹48,800 = ₹1,28,800 ₹80,000 + ₹40,000 = ₹1,20,000 ₹8,800 less This difference is only in the revised basic pay. When a fitment factor of 1.92 or more is applied to this, the difference in final salary will become even larger.

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