8th Pay Commission math: How Level 1-5 salaries could change

What different fitment factors may mean for take-home pay and pensions

As the 8th Pay Commission (CPC) process gathers pace, central government employees, especially those in Levels 1 to 5 are trying to gauge how it will change their salaries. While the final numbers will only be known once recommendations are notified, fitment factors offer a practical way to estimate potential outcomes.

 

Why the fitment factor matters

A fitment factor is the multiplier applied to the existing basic pay to arrive at the revised basic under a new pay commission.

 

Historically, this number has risen each time, from 1.86 in the 6th CPC to 2.57 in the 7th CPC. However, experts are divided on how high it can go this time.

 

 

Vivek Joshi, senior associate at PSL Advocates & Solicitors, says a range of 2.0 to 2.5 appears realistic, given inflation trends and fiscal limits.

 

“A figure materially higher than the 7th CPC level may be fiscally challenging,” he notes.

 

In contrast, Ramachandran Krishnamoorthy, director-payroll services at Nexdigm, expects a higher range of 2.7 to 3.0, arguing that repeating 2.57 after nearly a decade of inflation would offer limited real wage growth.

 

Others see a more moderate outcome.

Pratik Vaidya, managing director and chief vision officer at Karma Management Global Consulting Solutions, pegs the likely range at 1.9 to 2.3, citing tighter government finances and a lower dearness allowance (DA) base compared to 2016.

 

What it could mean for Level 1-5 salaries

Under the 7th CPC, minimum basic pay ranges from Rs 18,000 at Level 1 to Rs 29,200 at Level 5. Applying different fitment factors produces sharply different outcomes. For instance, a Level 1 employee’s basic pay could rise to about Rs 34,560 at a 1.92 factor, Rs 38,700 at 2.15, and Rs 46,260 at 2.57.

 

Krishnamoorthy explains that the impact goes beyond the headline number.

 

“A higher fitment factor has a compounding effect on house rent allowance, future DA hikes, pensions and annual increments,” he says. In his illustration, a Level 1 employee could see a monthly take-home increase of roughly Rs 12,000-Rs 14,000 at a 1.92 factor, compared with Rs 20,000-Rs 22,000 at 2.57, depending on city category and allowances.

 

Plan cautiously amid delays

Implementation timing is another uncertainty.

 

Rohit Jain, managing partner at Singhania & Co., cautions employees against borrowing in anticipation of large arrears.

 

“If the commission is implemented prospectively rather than retrospectively, arrears may be small or zero,” he says.

 

With DA having crossed 50 per cent, Jain adds that employees should claim allowances such as children's education allowance and the higher gratuity ceiling now, instead of waiting.

 

For pensioners, the stakes are equally high. Higher fitment factors lift pensions permanently but also raise long-term government expenditure, which is why experts expect a calibrated outcome rather than an aggressive jump.

 

Until clarity emerges, advisers suggest budgeting on the assumption that the 7th CPC structure will continue, using interim DA hikes to strengthen savings rather than fund new liabilities.