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8th Pay Commission: Grade Pay Vs Pay Bands Vs Pay Matrix, What Are These? How Fitment Factor Changed Under Them

Last Updated: The 8th Pay Commission will revise salaries, pensions, and allowances, directly benefiting over 50 lakh central government employees and over 65 lakh pensioners. As discussions grow louder about the 8th Central Pay Commission (CPC), over one crore central government employees and pensioners face a familiar question: How will my basic pay be reshuffled this time? The answer might lie in three decades of structural experiments – Grade Pay, Pay Bands, and the Pay Matrix – each revolutionising how the central government calculates salaries. Here's what are these, and why the fitment factor is important. The 8th Pay Commission will revise salaries, pensions, and allowances, directly benefiting over 50 lakh central government employees and over 65 lakh pensioners. The Three Eras of Salary Calculation Pre-6th CPC Era: Chaos Before the 6th Pay Commission in 2006, a large number of pay scales existed with no standardisation. Fitment factor was also non-existent. Before the 5th CPC, salary revisions relied on individual pay scale adjustments and merger of DA rather than a uniform multiplier. The fitment factor was introduced under the 5th Pay Commission. The Grade Pay Revolution (6th CPC, 2006) Pre-2006, India had over 4,000 disparate pay scales across roles. An undersecretary earned Rs 10,000, while a section officer made Rs 12,000 – with no logic linking hierarchies. The 6th CPC collapsed scales into 4 Pay Bands (e.g., PB-1: Rs 5,200–20,200) + Grade Pay (GP). GP determined seniority within bands (e.g., Rs 2,400 for clerk, Rs 4,800 for under secretary). A uniform 1.86x multiplier on 'Basic Pay + DA" placed employees in new bands. For example, Old Salary: Rs 50,000 (Rs 45,000 Basic + Rs 5,000 DA) → Revised: Rs 50,000 × 1.86 = Rs 93,000 (placed in PB-3 + GP Rs 6,600). Pay Bands + GP created anomalies. Senior promotions often landed employees below juniors due to overlapping bands. The pay bands were abolished. The 7th Pay Commission created a 24-level Pay Matrix where each cell represented a unique salary (e.g., Level 10: Rs 56,100–Rs 1,77,500). Vertical movement would include promotion, while horizontal movement would comprise annual increments. Under the 7th CPC, the government announced a fitment factor of 2.57x on 'Basic Pay + Grade Pay'. For example, pre-revised salary of Rs 25,400 (Rs 20,000 basic pay and Rs 5,400 grade pay) was revised to Rs 65,278 (Level 6) (Rs 25,400 × 2.57). Fitment Factors Under 5th, 6th, 7th, 8th CPCs 5th CPC (1997): First formal fitment (1.38x) but applied only after merging full DA with basic pay. 6th CPC (2006): Fitment factor was fixed at 1.86x. 7th CPC (2016): 2.57x aimed to offset inflation since 2006 – but employees demanded 3.68x. 8th CPC (Expected 2026): Expectations are of a fitment factor of 2.5x-2.8x, which might increase the employee salaries between Rs 40,000 and Rs 45,000. With the Pay Matrix likely staying, the real battle is over the fitment factor and allowance reforms. Key watchpoints: Will defense/get special fitment? (7th CPC gave them 2.67x). Will HRA, travel allowances be subsumed into basic pay? Can states afford matching revisions? (Kerala's 7th CPC fitment: 2.29x). When Will the 8th Pay Commission Be Formed And Implemented? The 8th Pay Commission was announced by the central government in January this year. However, it is yet to be constituted. Its members, chairman, and terms of reference (ToR) have not been announced yet. According to an ET report citing senior officials, the implementation of the 8th CPC might stretch 'well beyond the expected January 1, 2026, timeline". It said even if the Commission if formed by the end of this year, it will likely require 18-24 months before the recommendations are ready for implementation. The previous 7th Pay Commission was constituted two years before its implementation. Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates—only on News18. Also Download the News18 App to stay updated! tags : 8th Pay Commission Location : New Delhi, India, India First Published: June 11, 2025, 14:29 IST News business 8th Pay Commission: Grade Pay Vs Pay Bands Vs Pay Matrix, What Are These? How Fitment Factor Changed Under Them