Defence Minister Manohar Parrikar had earlier said the government was trying to issue the notification before Diwali, which falls on November 11.
Over 25 lakh veterans across the country will get at least Rs 3,000 to 5,000 more in pensions - depending on their last rank and years of service. And this will cost the exchequer a minimum of Rs 8,000 crore to start with.
The increased pension will be paid with effect from July 1, 2014.
The Government today issued the much awaited One Rank One Pension or OROP scheme. Although, a formal announcement on OROP was made on September 5, no official order was issued because of Bihar elections and the Election Commission's Model Code of Conduct.
Defence Minister Manohar Parrikar signed the official notification today evening making good his promise that the government will implement OROP before Diwali.
Pension arrears to widows and gallantry award winners will be paid in one go, the government said showing sensitivity. Others will get arrears in four equal instalments. But it was clear that veterans may not find all their demands met.
Pensions for all veterans will be equalized every five years although veterans want it equalized every two years at least. The government says this would be an administrative nightmare.
Reacting to the notification, Major General Satbir Singh (Retd) said that the notification "is not accepted". "This is 'One Rank Five Pension' and not 'One Rank One Pension'," he told news agency news agency ANI.
"This is injustice to the soldiers, we'll fight with the government in court," he said.
Also, in future, soldiers who quit without completing their full term irrespective of whether they have made it to the next rank will not get OROP. For instance, if a Colonel who doesn't make it to the next rank - Brigadier - retires before 54 years - when he completes his full term - will not get OROP.
This is also not acceptable to veterans. They claim that this forces soldiers to continue with the forces without any future prospects. Also they claim this is in contrary to keeping the forces young.
Further, the Government has appointed a one man judicial commission to examine issues. Force issues while veterans want the committee to comprise soldiers only.