The proposed committee will look into the grievances of the Armed Forces related to the remuneration being offered to them in the Sixth Pay Commission.
It has decided to form 3-member committee headed by External Affairs Minister Pranab Mukherjee. The committee will also have Defence Minister AK Anthony and Finance Minister P Chidambaram as its members.
The decision was taken after PM was consulted in the US on the issue.
All pending issues of Army on pay hikes will be addressed and resolved latest by October end.
All service headquarters - Army, Navy and Air Force - will issue notification on Monday to hand out the revised payscale according to the Sixth Pay Commission.