The Ministry of Finance issued Office Memorandum No. F.1(2)IMP/2026 on 21 July 2026, replacing the Basic Pay Scales 2022 with the revised Basic Pay Scales 2026, effective from 1 July 2026. The reform merges two prior ad-hoc relief allowances into base pay, introduces a new 7% Ad-hoc Relief Allowance for the current fiscal year, and freezes all percentage-based special allowances at their end-June 2026 levels.

How BPS-2026 is built: merged allowances and a new 7% top-up

The revised pay scales were created by absorbing the Ad-hoc Relief Allowance 2022: previously 15% of BPS-2017 running basic pay: and the Ad-hoc Relief Allowance 2025: previously 10% of BPS-2022 running basic pay: directly into the new base pay tables. Both allowances ceased to exist from 1 July 2026.

On top of the merged base, the government has sanctioned a fresh Ad-hoc Relief Allowance 2026 at 7% of BPS-2026 running basic pay, payable until further orders. It is subject to income tax and is admissible during leave, leave preparatory to retirement, and suspension, but does not count towards pension, gratuity, or house rent recovery. Employees posted abroad lose eligibility during the posting but regain it on repatriation at the rate they would have received domestically.

What the revised pay scales look like

The new minimum and maximum for each grade have risen substantially. BPS-1 now starts at Rs 16,280 (up from Rs 13,550) and tops out at Rs 31,880 after 30 annual increments of Rs 520. BPS-16 begins at Rs 33,720 (up from Rs 28,070) and reaches Rs 115,320. BPS-17 officers start at Rs 54,140 (up from Rs 45,070). At the apex, BPS-22 starts at Rs 146,770 (up from Rs 122,190) and can rise to Rs 293,350 over 14 increments of Rs 10,470 each.

Allowances frozen at 30 June 2026

Paragraph 7 of the memorandum states that all special pays, special allowances, and allowances calculated as a percentage of pay - including House Rent Allowance and the allowance equal to one month's basic pay: are frozen at the level admissible on 30 June 2026. The only exceptions are allowances already subject to a fixed maximum cap. This freeze applies to all federal employees from BPS-1 to BPS-22, including civil employees of the judiciary.

The irrevocable option: how employees must respond

Every federal employee must decide whether to adopt BPS-2026 or remain on BPS-2022. The procedure is mandatory and binding:

  • The employee's ministry, division, department or office must obtain an irrevocable written option from the employee.
  • The option must be submitted and communicated to the relevant Accounts Office or Drawing and Disbursing Officer within 30 days of the OM's issue - that is, by approximately 20 August 2026.
  • An employee who fails to exercise the option within the deadline is deemed to have opted for BPS-2026.

Fixation, increments and dispute resolution

Existing employees' basic pay as of 30 June 2026 is fixed in BPS-2026 on a point-to-point basis: at the stage corresponding to their position above the BPS-2022 minimum. Any personal pay drawn beyond the maximum of the old scale continues at revised rates. Annual increments remain admissible on 1 December each year under existing rules. An Anomaly Committee will be set up in the Finance Division's Regulations Wing to resolve any disputes arising from implementation.

What the memorandum does not yet specify is the exact composition and convening date of the Anomaly Committee, nor whether provincial governments will adopt a matching revision for their own employees.