According to Information and Broadcast Minister Priya Ranjan Dasmunshi, the revised pay scales will take effect from January 1, 2006.
He added that arrears will be paid in two installments, 40 per cent this fiscal and 60 per cent in the next financial year.
Approving the recommendations with slight modification, Dasmunsi said that the new system includes four pay bands and the mid-level officers have been placed in the highest pay band.
The minimum entry level pay has been raised to Rs 7,000 from Rs 6,660 per month recommended by the Commission. The minister also added that special allowances will be provided to Army commandoes and their Naval and Air Force equivalents.
The Sixth Pay Commission, headed by Justice B N Srikrishna, had in March submitted its report to the government, recommending an average 28 per cent hike for central government staff and defence personnel.
Prime Minister Manmohan Singh on Wednesday held a meeting with External Affairs Minister Pranab Mukherjee, Defence Minister A K Antony and Finance Minister P Chidambaram to discuss the pay commission report and the recommendations of the empowered committee of Secretaries that went into it.
The pay round comes roughly once a decade and the previous one in 1997 raised salaries for federal employees by nearly 40 per cent, prompting many state governments to follow suit and blowing the combined state and federal deficit to nearly 10 per cent of GDP.