How Salary Hike Percentage Is Calculated

Hike % = ((New salary − Old salary) ÷ Old salary) × 100. Going the other way, New salary = Old salary × (1 + hike ÷ 100). Both directions are available in our calculators, so you can start from whichever pair of numbers you actually have.

Your CTC moves from ₹7,50,000 to ₹9,00,000. The increase is ₹1,50,000. Divide by the old figure: ₹1,50,000 ÷ ₹7,50,000 = 0.20, so the hike is 20%. Note that the divisor is always the old salary. Dividing by the new salary would give 16.7%, which is a different quantity — the share of the new salary that the increase represents.

Percentages do not add. If you receive 10% one year and 12% the next, the total is 1.10 × 1.12 = 1.232, a 23.2% cumulative increase rather than 22%. Over several appraisal cycles this compounding gap becomes significant, which is why comparing cumulative growth is more honest than summing annual percentages.

If a revision takes effect in, say, October, your annual earnings for that financial year reflect only part of the increase. The hike percentage on your revised annual CTC is still the full figure, but the cash you actually receive that year is lower. Keep the two apart when you plan spending.

• Use CTC against CTC, or fixed pay against fixed pay — never a mix.
• Exclude one-time items such as joining bonuses and retention payouts, or state them separately.
• If variable pay differs between the two offers, compute the hike twice: once at 100% payout and once at 0%. The truth usually sits between.

A hike percentage says nothing about inflation, cost of living in a new city, the workload attached to the role, or the stability of the employer. It is one input into a decision, not the decision itself.