How to calculate salary hike percentage: formula, examples and in-hand effect

A salary hike percentage tells you how much your pay grew compared with what it was before. You need only two numbers: the old salary and the new salary. Both must be the same kind of figure, for example both yearly CTC or both monthly fixed pay.

Hike % = (New salary − Old salary) ÷ Old salary × 100

Example: your CTC goes from ₹8 lakh to ₹10 lakh. The increase is ₹2 lakh. Divide ₹2 lakh by the old ₹8 lakh and multiply by 100. The hike is 25.0%. Always divide by the old salary, not the new one.

If you know the hike percentage and want the new salary, turn the formula around:

New salary = Old salary × (1 + Hike % ÷ 100)

A 20% hike on ₹12 lakh is ₹12 lakh × 1.20 = ₹14,40,000. A 30% hike on the same salary is ₹12 lakh × 1.30 = ₹15,60,000.

1. Write down your current yearly CTC (cost to company) from your offer or appraisal letter.
2. Convert the hike to a multiplier: 10% is 1.10, 20% is 1.20, 30% is 1.30 and 50% is 1.50.
3. Multiply the CTC by the multiplier. That is your new CTC.
4. Divide the new CTC by 12 only if you want the gross monthly figure. Your bank credit will be lower, because PF, professional tax and income tax come off first.

The table applies each hike to a ₹10 lakh CTC. The in-hand figures assume a common structure: basic pay at 50% of CTC, PF of 12% on the ₹25,000 monthly wage ceiling, gratuity inside the CTC, professional tax of ₹2,500 a year, no variable pay and the new tax regime. Your own figures will differ if your structure is different.

• Up to a 30% hike, the new CTC stays in the zone where the new regime rebate leaves no income tax, so in-hand pay rises faster than CTC: 32.5% against 30%.
• At a 50% hike the new CTC of ₹15,00,000 brings income tax of ₹86,256 a year, so the in-hand rise drops to 44.6%.
• Going from a 30% to a 50% hike adds 20 more points of CTC, but the extra in-hand grows only from ₹24,399 to ₹33,477 a month, because tax takes a share of the last part.

"30% hike" can mean three things, and each gives a different rupee amount. Before you compare offers or appraisals, check which one is being quoted.

• Hike on CTC. CTC is everything the employer spends on you in a year, including employer PF, gratuity and any bonus. Most offer letters and job switches quote the hike on CTC.
• Hike on fixed pay. Fixed pay is CTC minus variable pay, bonuses and one-time items. It is what you are paid every month for sure. Many annual appraisals apply the hike to fixed pay only.
• Hike on in-hand pay. In-hand (take-home) pay is what reaches your bank account each month after your PF, professional tax and income tax (TDS). This is the number that changes your budget, and it almost never rises by the same percentage as CTC.

Some employers also apply the hike to basic pay only and then recalculate HRA and other parts. Ask HR for the full old and new salary breakup, then use the formula on whichever figure you want to compare.

Two things decide how much of a CTC hike reaches your hand: income tax and PF.

• Income tax. In the new regime, salary up to ₹12 lakh of taxable income (after the ₹75,000 standard deduction) pays no tax because of the rebate. Once your new salary crosses that line, a part of every extra rupee goes to tax at your slab rate of 5% to 30%, plus 4% cess. The higher your salary, the bigger that share.
• PF on the wage ceiling. From 17 September 2026 the EPF wage ceiling is ₹25,000 a month. If your employer calculates PF on the ceiling, your PF stays at ₹3,000 a month once basic pay reaches ₹25,000, no matter how big the hike. So the extra salary is not reduced by PF.
• PF on the full basic. If PF is 12% of your whole basic, it grows with every hike. Your EPF savings rise, but take-home rises a little less.

Because of these rules, a 30% hike on ₹6 lakh CTC raises in-hand pay by 34.4%, more than 30%, since there is no tax and PF is already at the ceiling. The same 30% hike on ₹12 lakh raises in-hand by only 23.3%, because the new CTC of ₹15,60,000 brings ₹95,391 of tax a year. The guide on what a 30% hike on CTC means for in-hand salary shows this at five salary levels.

If HR gives you only the new salary, use the same formula. Take the old and new figures of the same kind, subtract, divide by the old figure and multiply by 100.

• CTC went from ₹9 lakh to ₹10.8 lakh: hike = 20.0%.
• Monthly fixed pay went from ₹50,000 to ₹56,000: hike = 12.0%.
• Net pay on the payslip went from ₹60,000 to ₹70,000: in-hand hike = 16.7%.

The same formula works for a pay cut, and the result is negative. Note that percentages are not symmetric. A rise from ₹9 lakh to ₹10.8 lakh is 20.0%, but a fall from ₹10.8 lakh back to ₹9 lakh is -16.7%, because the base has changed.

In Excel or Google Sheets, put the old salary in A1 and the new salary in B1, then type =(B1-A1)/A1 in C1 and format C1 as a percentage.

Calculate your hike and new in-hand payEnter your current CTC and either the hike percentage or the new CTC. See the new monthly in-hand, the extra tax and the hike after inflation.Open with these numbers

1. Dividing by the new salary. ₹2 lakh more on ₹8 lakh is 25.0%, not 20%. The base is always the old salary.
2. Mixing figures. Comparing old in-hand pay with new CTC makes the hike look much bigger than it is. Use the same kind of figure on both sides.
3. Counting one-time money as a hike. A joining bonus or retention bonus is paid once. It does not repeat next year, so leave it out of the hike calculation.
4. Assuming the full variable pay. Variable pay depends on targets. If you include it in the new CTC but receive only part of it, the real hike is lower.
5. Ignoring tax. A hike that takes your salary past the ₹12 lakh taxable line in the new regime can add tax for the first time. Check the in-hand figure, not only the CTC.
6. Ignoring inflation. A 10% hike with prices rising 6% a year buys you only a little more. The real hike is (1 + hike) ÷ (1 + inflation) − 1.

See your full salary breakupCheck basic, HRA, PF, professional tax and income tax for your new CTC, in both tax regimes.Open with these numbers

Annual appraisal hikes in India are usually in single digits. Aon's salary survey projected an average increase of about 9.1% for 2026 across industries, with junior staff and some sectors higher. Hikes on a job switch are negotiated case by case and are often larger than appraisal hikes, but the size depends on role, skills and the company. These are averages, not a benchmark for any one person. Use the formula and the salary hike calculator to see what a given hike means for your own pay.