Appraisal season and job offers both come down to one number: how much is my salary going up? HR letters and recruiters often talk in lakhs per annum (LPA), CTC and in-hand pay, which makes it easy to misjudge a raise. The maths itself is simple once you know the formula. This guide shows how to calculate a salary hike percentage, how to work out your new salary from a percentage, why CTC and in-hand hikes differ, and how inflation changes the picture.
Enter your old and new salary to see the percentage increase instantly.
Open the percentage calculator →The salary hike formula
Hike % = (New salary − Old salary) ÷ Old salary × 100
Example 1: your CTC goes from ₹6 LPA to ₹7.2 LPA. The increase is ₹1.2 lakh, and 1.2 ÷ 6 × 100 = 20% hike.
Example 2: your monthly in-hand salary goes from ₹40,000 to ₹46,000. The increase is ₹6,000, and 6,000 ÷ 40,000 × 100 = 15% hike.
Always divide by the old salary. Dividing by the new salary is a common mistake that makes the hike look smaller (in example 1 it would give 16.7% instead of 20%).
Finding your new salary from a hike
New salary = Old salary × (1 + Hike % ÷ 100)
Example: a 12% hike on ₹8 LPA gives 8 × 1.12 = ₹8.96 LPA.
And to find the hike you'd need for a target: going from ₹8 LPA to ₹10 LPA needs (10 − 8) ÷ 8 × 100 = 25%. Knowing this number helps you judge whether a target is realistic in one appraisal, or better reached with a job switch.
Comparing a job offer
If you earn ₹7.5 LPA and receive an offer of ₹9 LPA, that is (9 − 7.5) ÷ 7.5 × 100 = 20% more on paper. Before celebrating, compare like with like:
- Fixed vs variable pay: a performance bonus or variable component may not be paid in full. Compare fixed pay separately.
- In-hand pay: PF contributions, gratuity, insurance and other benefits are often included in CTC but don't reach your bank account every month.
- One-time amounts: joining bonuses and relocation allowances are usually one-off, so leave them out of the yearly comparison.
- Costs: a new city, longer commute or higher rent can take away part of the raise.
CTC hike vs in-hand hike
A 15% CTC hike doesn't always mean 15% more money in your account each month. Income tax is progressive, so part of a raise may be taxed at a higher slab, and changes in PF, allowances or variable pay also affect in-hand salary. When you receive your new salary structure, calculate the hike on both CTC and monthly in-hand pay – the second number is what changes your budget. Our guide to the 50-30-20 budget rule shows a simple way to plan how to use a raise.
Real hike: adjusting for inflation
If prices rise by 5% in a year, a 5% raise only keeps you where you were. Your real hike is roughly your raise minus inflation, or more precisely:
Real hike % = (1 + hike) ÷ (1 + inflation) − 1
Example: a 10% raise with 5% inflation gives 1.10 ÷ 1.05 − 1 = 4.76% real increase in what your salary can buy. This is why a raise below inflation can feel like a pay cut.
Hikes compound over time
Two back-to-back 10% hikes are not a 20% increase – they are 21%, because the second hike applies to the already-raised salary (1.10 × 1.10 = 1.21). Over several years, this compounding makes consistent raises and well-timed job switches very powerful. It also works in reverse: a year without a raise costs more than it seems, because every future hike starts from a lower base.
Quick reference
| Old salary | New salary | Hike |
|---|---|---|
| ₹6 LPA | ₹7.2 LPA | 20% |
| ₹7.5 LPA | ₹9 LPA | 20% |
| ₹8 LPA | ₹8.96 LPA | 12% |
| ₹8 LPA | ₹10 LPA | 25% |
| ₹40,000/month | ₹46,000/month | 15% |
Frequently asked questions
How do I calculate my salary hike percentage?
Subtract your old salary from your new salary, divide by the old salary, and multiply by 100. For example, ₹6 LPA to ₹7.2 LPA is a 20% hike.
What is my new salary after a 10% hike?
Multiply your current salary by 1.10. For example, ₹5 LPA becomes ₹5.5 LPA.
Should I compare CTC or in-hand salary?
Compare both. CTC shows the total package, but in-hand salary is what you actually receive each month after deductions.
What is a real salary hike?
It is your raise adjusted for inflation. A 10% raise with 5% inflation is about a 4.8% real increase.