8th Pay Commission Delay May Cost Central Government Employees Up to ₹3.8 Lakh, HRA Loss a Major Concern

The delay in the implementation of the 8th Pay Commission is increasingly becoming a matter of concern for central government employees and pensioners. While there is an expectation that arrears on basic salary will eventually be paid once the new pay structure is implemented, experts warn that employees may still face a significant financial loss, particularly due to the absence of arrears on House Rent Allowance (HRA). According to estimates, this delay could result in losses of up to ₹3.80 lakh for some employees.

Why Is the 8th Pay Commission Delay Important?

The tenure of the 7th Pay Commission is scheduled to end on December 31, 2025, and it was widely expected that the recommendations of the 8th Pay Commission would come into effect from January 1, 2026. However, recent developments suggest that this timeline may not be met.

In November 2025, the Ministry of Finance granted the 8th Pay Commission 18 months to submit its report. Experts believe that after the submission of the report, the government may take an additional six months to examine and implement the recommendations. This indicates a potential delay of up to 24 months, pushing the effective date to January 2028.

Although the government has historically paid arrears from the original effective date, not all salary components are eligible for arrears. This is where the major financial impact lies.

Will Employees and Pensioners Suffer Financial Losses?

Past pay commissions were also implemented with delays, but arrears on basic pay were paid retrospectively. However, under the existing rules, several allowances do not attract arrears, even if the pay commission is implemented later than expected.

According to reports, including one by ET, the biggest loss for employees will be on HRA, which does not receive arrears under a new pay commission. This means that even if basic pay arrears are credited later, employees permanently lose the higher HRA they would have received during the delayed period.

How Can the Loss Reach ₹3.80 Lakh?

To understand the impact, consider an employee with a basic salary of ₹76,500 under the 7th Pay Commission. If the 8th Pay Commission is implemented from January 2026 with an assumed fitment factor of 2.1, the revised basic pay would rise significantly, leading to a much higher HRA.

However, if the same pay commission is implemented only from January 2028, the employee would continue receiving HRA based on the old basic salary for two additional years. Over a 24-month period, the cumulative loss in HRA alone could exceed ₹3.80 lakh, depending on the city category and revised pay structure.

This loss is permanent, as HRA arrears are not paid retrospectively.

Which Allowances Do Not Get Arrears?

Central government employees receive several allowances along with basic pay, but not all of them qualify for arrears when a new pay commission is delayed.

• Dearness Allowance (DA): DA does not receive arrears because it is merged into the basic pay at the end of a pay commission cycle to calculate the new fitment factor. Currently, DA stands at 58%.

• House Rent Allowance (HRA): This is the largest source of loss. Employees do not receive HRA arrears under a new pay commission, making delays extremely costly.

• Transport Allowance (TA): TA is revised under a new pay commission, but arrears are not paid.

• Other Fixed Allowances: Uniform Allowance, Child Education Allowance (CEA), and similar benefits are also revised but do not attract arrears.

Only basic pay arrears are paid retrospectively once the new pay commission is implemented.

HRA Rates Under the 7th Pay Commission

Under the 7th Pay Commission, HRA rates are based on city classification:

• X Category Cities: 24% of basic pay

• Y Category Cities: 16% of basic pay

• Z Category Cities: 8% of basic pay

The government has also fixed minimum HRA amounts:

• ₹5,400 for X cities

• ₹3,600 for Y cities

• ₹1,800 for Z cities

With a higher basic pay under the 8th Pay Commission, these percentages would translate into much higher HRA payouts—benefits that employees stand to lose if implementation is delayed.

Final Takeaway

While central government employees may eventually receive arrears on their revised basic pay under the 8th Pay Commission, the delay could still result in a substantial financial setback. The absence of arrears on HRA means that employees may permanently lose lakhs of rupees, even if salaries are revised later.

As uncertainty continues around the implementation timeline, employees and pensioners are closely watching government announcements, hoping for clarity to minimize the financial impact of the delay.