New pay scale: Smaller increments for senior officials, house rents lowered for all
However, under the new pay scale, house rent allowances are reduced as basic salaries are set to rise by 100-142%, helping offset the higher cost of living, according to minutes of a cabinet meeting held on 31 August, chaired by the prime minister
Highlights:
- New pay scale lowers annual increments for higher-grade employees
- Basic salaries will rise 100%-142%, while house rent rates fall
- Higher-grade eligibility period will drop from 10 years to eight
- Medical, mobile, transport and other allowances will generally increase
- Armed forces pay and specialised allowances will receive significant increases
- Full implementation is projected to cost Tk2.37 lakh crore
The proposed new pay scale will introduce lower annual increment rates for higher-grade employees across the military and civil services, state-owned companies and autonomous institutions, meaning those with higher basic salaries will receive smaller increments.
However, under the new pay scale, house rent allowances are reduced as basic salaries are set to rise by 100-142%, helping offset the higher cost of living, according to minutes of a cabinet meeting held on 31 August, chaired by the prime minister.
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The National Pay Scale and Armed Forces Pay Scale 2026 were approved at that meeting.
Currently, government employees across all grades get a 5% uniform annual increment. The new pay scale will replace this uniform rate with different increment rates based on grades.
Employees from Grades 20 to 6 will continue to receive a 5% annual increment. The rate will fall to 4% for Grade 5, 3.5% for Grades 4 and 3, and 2.75% for Grade 2.
The same principle will apply to the armed forces. Officers holding the rank of Captain and equivalent or below will receive a 5% increment, while the rate will be 4% for Majors, 3.5% for Lieutenant Colonels and Colonels, and 2.75% for Brigadier Generals and equivalent ranks.
Besides, the special incentive introduced in 2024 – initially at 5% and later raised to 10% – will be scrapped once the new pay structure takes effect.
Since 1973, the government has introduced eight pay scales, usually every five to seven years. The 2015 pay scale introduced a uniform 5% annual increment for all employees and the government said no new pay commission would be needed.
At that time, the government also said annual increments would be adjusted for inflation when it exceeded 5%, but the finance ministry never implemented the provision.
House rent allowance
Under the existing 2015 pay scale, government employees working within Dhaka city receive house rent allowances ranging from 50% to 65% of their basic salary, depending on their grade. Under the new pay scale, the rate will be reduced to 40% to 60%.
Although the allowance will be lower as a percentage of basic pay, the actual amount will increase as basic salaries are set to double or rise by more than 100% across grades.
For employees working in other city corporation areas and Savar upazila, the current rent allowance is 40-55% of basic pay. Under the new pay scale, it will be reduced to 30% to 50%.
For employees working outside Dhaka and other city corporation areas and Savar upazila, the allowance will be reduced from the current 35%-50% to 25%-45% of basic pay.
Higher grade
Under the existing pay scale, an employee who remains in the same grade for 10 years is automatically moved to a higher grade. Under new rules, this period will be eight years. However, the requirement of six years in the same grade will remain for a second move.
Employees in promotion-eligible posts will be allowed to move to a higher grade without promotion no more than twice during their careers. In other words, an employee who remains unpromoted despite being eligible for promotion can reach only two higher grades.
Employees in posts with no provision for promotion and officially designated as blocked posts will be eligible for three higher-grade upgrades. The first will come after eight years of service, the second after another six years and the third after a further eight years.
Medical allowance
Currently, all employees receive Tk1,500 a month as medical allowance, while pensioners over 65 receive Tk2,500.
Under the new scale, employees up to 50 will get Tk3,000 and those aged over 50 to 60 will get Tk4,000, regardless of grade. Pensioners aged over 60 and up to 70 will receive Tk5,000 a month, while those aged over 70 will receive Tk6,000.
Mobile allowance
For the first time, the government will provide a mobile phone allowance to all government employees under the new pay scale.
Currently, officials in Grades 1-3 receive Tk1,500 a month and those in Grades 4-5 receive Tk1,000, while employees in other grades receive no mobile allowance.
Under the new pay scale, the allowance for Grades 1 to 5 will be reduced to Tk500 a month, while employees in Grades 6 to 20 will receive Tk150 a month.
Other allowances
The monthly transport allowance will rise from Tk300 to Tk600, while the tiffin allowance will increase from Tk200 to Tk500. The washing allowance will rise from Tk100 to Tk300.
The Bangla New Year allowance, currently 20% of basic pay, will be reduced to 15%.
The Hill Allowance – paid to employees who work in remote hilly regions – will remain at 20% of basic pay under the new pay scale. However, the maximum allowance will be Tk5,000 for district and upazila headquarters and Tk5,500 for areas outside these locations.
Allowance for haor, islands and chars will also remain at 20%, with a maximum of Tk5,000.
Existing rates and amounts will remain unchanged for education assistance, charge allowance, entertainment allowance, cook and security allowance, festival allowance, and rest and recreation leave and allowance.
Risk allowance
The government initially introduced a risk allowance of 40% of basic salary for police ahead of the 2014 election amid political violence. It was later extended to various other agencies.
When the 2015 pay scale was introduced, the existing risk allowances were retained at fixed amounts based on employees' positions. The gazette also specified that the allowance would not be calculated as a percentage of basic salary.
Under the new pay scale, various special allowances, including risk allowance, are expected to increase by 20% from their current amounts.
Similarly, the deputation allowance for employees posted to training institutions, currently set as a fixed amount, may be revised to 10% of basic salary under the new pay scale.
Armed forces pay structure
The pay scales for all corp s and equivalent ranks in the armed forces may be aligned with Grades 1-18 of the proposed National Pay Scale 2026, covering 17 ranks.
Under the proposed structure, the starting basic salary for Non-Combatant (Enrolled), and equivalent ranks would be Tk21,000, while the fixed salary for Major General and equivalent ranks would be Tk1,56,000, corresponding to Grade 1 of the National Pay Scale.
Brigadier Generals and equivalent ranks may be placed at the initial step of Grade 2, while Colonels and equivalent ranks may be placed at the initial step of Grade 3.
Flight pay in the Air Force may increase by 100%-125% from existing levels. Command, staff, teaching, qualification, disturbance, and specialist pay may each increase by 10%.
Skill, appointment, parachute, commando/sniper, Special Warfare Diving and Salvage (SWADS)/scuba diving, and good-conduct pa y may increase by 15% from current levels.
The secretary-level committee reviewed 81 types of allowances for armed forces. Most of these, including defence allowance, kit allowance, danger money, interpreter and teaching allowance, may increase by 10%. Survey allowance may rise by 30%.
However, house rent, transport, entertainment, tiffin, washing, hill, festival, rest and recreation, Bangla new year, education assistance, medical, and deputation allowances for training institutions will be aligned with the corresponding provisions of the new pay scale.
Full implementation to cost Tk2.37 lakh crore
Officials said the finance ministry is currently drafting the gazette for the new pay structure. Basic salaries will be implemented in three phases – in July this year, December and July next year – while employees will receive all allowances from January 2028.
The new pay structure will add Tk1,05,380 crore to government expenditure over three years. The additional cost will be Tk37,372 crore in the current year, Tk44,838 crore in 2027 and Tk23,170 crore in 2028.
Under the existing pay structure, the government would spend Tk1,31,284 crore this fiscal year on salaries, allowances, pensions, gratuities and lump-sum payments.
With the new pay scale, the cost will rise to Tk1,68,656 crore this year, Tk2,13,494 crore next year and Tk2,36,664 crore in the following fiscal year once all allowances are implemented.
