8th Pay Commission & the DA Merger Mystery: What Happens to Your 50%+ Dearness Allowance Now?
By Admin- Central 8th Pay Commission| New Delhi | Updated: Dec 31, 2025, 10:15 IST
Traditionally, a new Pay Commission marks a “reset” button for inflation-linked allowances. For the last decade, employees have watched their DA climb from 0% to over 50%. Now, the million-dollar question is whether this DA will be merged into the basic pay immediately, or if the government will follow a new formula for 2026.
The ‘DA Reset’ Explained: Winners and Losers
In every previous pay revision, the existing DA is “consumed” by the new Fitment Factor to create a higher Basic Pay. For example, if your DA is at 58% today, the 8th CPC fitment factor (likely between 1.92 and 2.28) will absorb this 58% and convert it into a permanent, pensionable salary base.
The Catch: Once the merger happens, the DA percentage for January 2026 starts again from Zero. While this sounds scary, it is actually a massive win for employees because future DA increases will be calculated on a much larger “Basic Pay” amount.
The Union Push: ‘No Zero Reset’ Demand
However, the 2026 transition is different. Employee federations, including the National Council (JCM), are reportedly pushing for a partial merger. Sources suggest that unions have requested the government to merge 50% of the DA into the basic pay now, while allowing the remaining balance to stay as a separate allowance.
“We don’t want a total reset to zero,” says a representative from a leading railway union. “With the current cost of living in 2026, a total reset without a significant fitment factor of 2.5x or higher will leave mid-level employees struggling for the first two years of the new commission.”
Impact on Your Take-Home Salary (Projected)
If the government sticks to the standard 10-year reset, here is how the 2026 transition looks for a Level-1 employee:
| Component | Current (Dec 2025) | Expected (Jan 2026) |
|---|---|---|
| Basic Pay | ₹18,000 | ₹41,000 (at 2.28 Factor) |
| DA Percentage | 58% | 0% (Reset) |
| Monthly DA Value | ₹10,440 | ₹0 (Merged into Basic) |
What to Watch for in the New Year?
The Ministry of Finance is expected to issue a ‘Letter of Intent’ in the first week of January. While the actual cash in hand may only change after the 8th CPC report is submitted in 2027, your Arrears will start piling up based on this January 1st reset. The “DA Merger” remains the single most important factor in deciding the size of that final Arrears cheque.