Working out an increment
An appraisal letter usually states the hike either as a percentage or as a new CTC, often effective from 1 April while the revised salary is actually paid from June or July. Employees want to know the new monthly figure and how much arrears they will receive; payroll needs the same numbers plus the PF/ESI impact. This calculator handles all three ways of expressing a hike and prepares a month-wise arrears statement.
Formulas
- New salary = Current salary × (1 + hike %) — or Current + hike amount
- Hike % = (New − Current) ÷ Current × 100
- Arrears = (New − Current) × number of months between the effective month and the month of first revised payment
- Real hike = (1 + hike %) ÷ (1 + inflation %) − 1
- Years to double salary = log 2 ÷ log (1 + hike %)
Worked example
Current salary ₹40,000 per month, 10% hike effective 1 April 2026, first paid with July 2026 salary. New salary = ₹44,000; monthly increase ₹4,000; annual increase ₹48,000. Arrears for April, May and June = 4,000 × 3 = ₹12,000, so the July credit is 44,000 + 12,000 = ₹56,000 before deductions. With inflation at 4%, the real hike is about 5.8%, and at 10% a year the salary doubles in roughly 7.3 years.
Points for payroll
PF and ESI on arrears are deposited in the month of payment, and ESI eligibility is re-checked against the revised gross only at the start of the next contribution period. TDS is recomputed on the higher annual income. If arrears relate to an earlier financial year, the employee can claim relief under Section 89(1) by filing Form 10E before the return.
Who should use it
Employees evaluating an appraisal or counter-offer, HR teams drafting increment letters, and accountants processing arrears in bulk. Switch the basis to Annual to work directly with CTC figures.
Frequently Asked Questions
How do I calculate hike percentage from old and new salary?
(New salary − Old salary) ÷ Old salary × 100. Choose "New salary" mode and the calculator shows the percentage.
Are salary arrears taxable?
Yes, in the year they are received. If they relate to earlier years and push you into a higher slab, claim relief under Section 89(1) by filing Form 10E online before filing your ITR.
Is PF deducted on arrears?
Yes. PF (and ESI, if covered) is payable on the arrears of basic/gross in the month of payment, and the employer must include it in that month's ECR.
What is a good increment in India?
Average increments across industries have been 9–10% in recent years; 12–15% is considered strong, while anything below the inflation rate (about 4–5%) is a real-terms pay cut.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.