Banerjee, who was handed part of the Pay Commission recommendations during the day, said her government would have to bear additional expenses of Rs 10,000 crore to implement the proposals.
The recommendations would be taken up at the September 23 meeting of the state cabinet and the new salary structure would come into effect from January next year.
"We have decided to implement the Pay Commission's recommendations notwithstanding our huge debt burden," Banerjee said, during her address at a programme of pro-government employees union.
The commission, led by Abhirup Sarkar, has recommended a minimum basic pay of Rs 17,990, up from Rs 7,000. The gross pay, including House Rent Allowance, will go up to Rs 20,148.
The ceiling for gratuity has been enhanced to Rs 10 lakh from Rs 6 lakh at present.
Talking to IANS, Sarkar said the recommendations will benefit 8.5 lakh government employees, including five lakh teachers. Another 1.5 lakh employees of municipal corporations, municipalities and government run companies would also be benefited.
Sarkar said he had handed over to the government that part of the panel's report that deals with salaries, allowances and pensions.
The employee unions, however, gave mixed reaction to the recommendations.
Dibyendu Roy, convenor of the Trinamool-backed Sarkari Karmachari Federation, called the Chief Minister's announcements "historic".
"The government is not only accepting the recommendations in toto, but also implementing them very fast, " he said.
On the other hand, Sanket Chakraborty, General Secretary of the state steering committee of government employees, pulled up the government for the "unusual delay" in the commission filing its report.
The Pay Commission was constituted in November 2015, and the Banerjee government had extended its tenure multiple times.
"I understand that instead of giving arrears for four years, the government is giving arrears for only a year. The Chief Minister has also not made any categorical comment about the percentage of house rent allowance. In all, this is the latest addition to the long list of discrimination that the state employees are facing in Bengal. We will have to launch an agitation on that issue in future, " he said.
The state government employees have for years been aggrieved over their salaries not being revised and their dearness allowances not going up.
Their resentment was reflected in the recent Lok Sabha polls where the Trinamool Congress trailed behind its rivals in postal votes in 40 of the 42 constituencies.
The state government employees comprise a substantial part of those exercising their rights through postal ballots.