An increment or a salary hike is the increase in the current salary of any employee by a certain amount. It is expressed as a percentage of the current salary. Increments can be given quarterly, half-yearly, or yearly and are also used by employees to negotiate their salaries with a new employer.
Calculating the salary hike percentage is very important for both the employer and the employee. If you don’t know how to calculate salary hike percentage in India, you’ve landed on the perfect article.
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How to calculate salary hike percentage?
Salary hikes can be either expressed as a percentage or absolute amount.
There are two ways to calculate the salary hike percentage:
Let us look at an example to understand more.
An example of how to calculate the percentage of hike in salary
Let’s say that the current salary of Shubham is INR 30,000. The company is giving him a hike of 40% on his current salary. Then the future salary will be calculated as follows –
| Current Salary (in INR) | Hike Percentage | Formula | Future Salary/ Salary after Increment (in INR) |
| 30,000 | 40% | 30,000*40% = 12000 | (30000+12000) |
| Total Future Salary | 42000 |
Let us take forward the example given above. Let’s say the current salary of Mr X is INR 30,000 and his future salary after increment is INR 42,000. Then the percentage of hike in salary will be calculated as follows –
| Current Salary (in INR) | Future Salary/ Salary after Increment (in INR) | Formula* | Percentage Hike |
| 30000 | 42000 | (42000-30000)/30000*100 | 0.4*100 |
| Percentage Hike in Salary | 40% |
Formula for calculating percentage hike in salary is : (New Salary – Old Salary)/Old Salary*100
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FAQs
1. How is the hike percentage calculated?
The salary hike percentage is calculated using the following formula –
(New salary – Old Salary) / Old Salary * 100 = Hike percentage.
- The first step is to find the difference between the new salary and the old salary
- Then the amount obtained is divided by the old salary.
- The figure thus obtained is multiplied by 100 to express it in percentage.
2. How is a 30 per cent hike in salary calculated?
A 30 % hike in salary is calculated as follows –
For better understanding, let’s assume the current salary to be INR 10,000
| Current Salary (in INR) | Hike Percentage | Formula | Future Salary/ Salary after Increment (in INR) |
| 10000 | 30% | 10000*30% = 3000 | (10000+3000) |
| Total Future Salary | 13000 |
