Sep 15, 2026, 11:29:00 AM IST

Several central government employee organisations have asked the 8th Pay Commission to merge dearness allowance (DA) with basic pay once it crosses 25%. At present, DA is revised twice a year but is not added to basic salary. Employee bodies argue that merging DA could help salaries rise faster, especially for lower- level employees facing high living costs in big cities.

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The demand for the proposed DA-merger threshold varies across employee organisations. NC-JCM and AIDEF have suggested annual increments of 6%, while AINPSEF and PSNM have proposed 7%. AINPSEF and NFPE want DA merged with basic pay once it reaches 25%. IRTSA and PSNM have also proposed a 50% threshold. These are the recommendations submitted to the 8th Pay Commission, not approved changes.

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The proposed mechanism can be understood through a simple salary calculation. Suppose an employee’s revised basic pay is first determined using an assumed fitment factor. Annual increments then increase basic pay, while DA rises separately each year. When DA reaches the proposed merger threshold, it could be added to basic pay. This can create a much larger basic salary and increase the employee’s future pay base.

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Consider a Level 1 employee whose existing basic pay is ₹18,000. With an assumed 2.1 fitment factor, the revised basic pay would be ₹37,800 from January 2026. If basic pay grows by 7% annually and DA rises by an average 4% a year, the basic pay could reach ₹60,699 by January 2033, with DA at 28%. A DA merger at that stage could push the gross salary to ₹77,694.

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A Level 6 employee with a 7th Pay Commission basic pay of ₹35,400 would get an estimated revised basic pay of ₹74,340 at a 2.1 fitment factor. Assuming a 7% annual increment and 4% yearly DA hike, basic pay could reach ₹1,19,374 by January 2033. With 28% DA of ₹33,425, gross salary could rise to ₹1,52,798.

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