8th Pay Commission: Rs 75,000 Arrears Expected, Tax Impact Looms for Employees

• Central government employees await the 8th Pay Commission, with changes effective from January 1, 2026, improving living standards for millions.
• New pay commission recommendations are expected to be implemented by late 2026, with approval for commission formation by mid-2025.
• Increased salaries will be calculated retrospectively from January 2026, with accumulated arrears paid as a lump sum, potentially up to Rs. 75,000.
• Employees should note increased income tax liability, as large arrears may push many into the 30 percent tax slab.
• The full implementation process, including benefits for pensioners, may extend until 2027 or 2028, positively impacting the economy.

Why It Matters: Central government employees can expect significant arrears from the 8th Pay Commission, but also higher taxes.