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DATE: Feb 1, 2026
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FOCUS: 8th CPC & Tax Relief
Budget 2026 Expectations: 8th Pay Commission Formation, Tax Rebate up to ₹10 Lakh & HRA Tweaks
🤖 Analyst Verdict: What is Likely?
With General Elections behind us, the 2026 Budget will focus on Fiscal Consolidation rather than populism.
• 8th CPC: MEDIUM CHANCE Formation of Committee is possible, but implementation is due in 2026.
• Tax Relief: HIGH CHANCE Standard Deduction may rise to ₹1 Lakh to push the New Regime.
• OPS Return: ZERO CHANCE Govt is sticking to NPS/UPS.
The Union Budget 2026, to be presented by the Finance Minister on February 1, holds immense significance for the 48 Lakh Central Government employees and 68 Lakh pensioners. With the DA crossing 50% and inflation stabilizing, the demand for salary revision and tax relief has peaked.
1. 8th Pay Commission: The Big Question
The 7th CPC recommendations were implemented on Jan 1, 2016. Historically, a new commission is set up every 10 years. We are in 2026, the theoretical implementation year.
| Parameter | 7th CPC (Current) | 8th CPC (Expected) |
|---|---|---|
| Fitment Factor | 2.57 | 1.96 to 2.25 (Est.) |
| Minimum Salary | ₹18,000 | ₹21,600 – ₹26,000 |
| Revision Basis | 10-Year Cycle | Automatic Periodic Revision (Aykar Formula)? |
2. Income Tax 2026: New Regime Tweaks
The government wants to make the “New Tax Regime” the only default option. To achieve this, Budget 2026 might offer sweeteners to lure remaining employees away from the Old Regime (80C).
- Standard Deduction: Likely to be hiked from ₹75,000 to ₹1,00,000.
- Rebate Limit (87A): Demand to increase tax-free income threshold from ₹7 Lakh to ₹8-10 Lakh.
- HRA in New Regime: There is a slim chance that HRA exemption *might* be introduced in the New Regime to kill the Old Regime completely.
⚠️ The “DA Merger” Rumor
Fact Check: Do not fall for news claiming “DA will merge with Basic Pay at 50% automatically.”
- The Rule: The 7th CPC explicitly removed the provision for automatic merger of DA.
- Reality: Allowances (HRA, CEA, Gratuity) increase by 25%, but Basic Pay does NOT increase until the 8th Pay Commission is implemented.
3. Pensioners’ Wishlist
For senior citizens, the key expectation is the restoration of commuted pension.
- Current Rule: Full pension is restored after 15 years of retirement.
- Demand: Restore it after 12 years (since the principal + interest is usually recovered by then).
- Fixed Medical Allowance (FMA): Expectation to increase FMA from ₹1,000 to ₹3,000 per month for those not covered by CGHS.
Get the Finance Minister’s Speech Highlights?
Disclaimer: These are pre-budget expectations based on demands by NJCA and Staff Side National Council. Official announcements will be made on Feb 1, 2026.