The Union Cabinet on Wednesday extended the deadline for the Seventh Pay Commission to submit its recommendations by four months to 31 December.
"The Cabinet approves extension of the term of the 7th Central Pay Commission by four months, that is up to December 31, 2015," an official spokesperson tweeted.
Earlier, it was reported that the commission, headed by Justice AK Mathur, had sought one-month extension of the deadline.
Appointed by the then UPA government in February 2014, the commission was given 18 months to submit its report. The time allotted for the commission was to expire this month.
The finance ministry estimates the central government's salary bill to rise by nearly 16% to Rs 1.16 lakh crore in the next financial year 2016-17 with the implementation of the recommendations of the Seventh Pay Commission.
The pay commission is likely to recommend hike in government employees' salaries by nearly 40%, according to an analyst at global brokerage firm Credit Suisse.
An official of the commission had said that the recommendations "need to be effective from 1 January 2016, or by April 2016 at the latest".
"It will be the government's prerogative when to implement it. But beyond 1 January 2016, there will be arrears. But then, the government will be subject to criticism. Earlier, they had hidden behind Pay Commissions giving late reports," he had said.
