Salary Hike Guide: How to Calculate and Negotiate Your Appraisal
Appraisal season lands in most Indian companies between March and July, and it brings the same moment every year: an HR email with a new CTC number, and a few seconds of squinting at it trying to figure out if it is actually good. Is a jump from ₹8,00,000 to ₹8,80,000 a solid hike, or is your friend at a rival firm laughing at you over chai? The honest answer needs a calculation, not a gut feeling.
This post walks through exactly how to work out your salary hike percentage, what counts as a fair hike in India in a typical appraisal cycle, and how to use that number to negotiate rather than just accept whatever lands in your inbox.
What is a salary hike percentage? #
A salary hike percentage is simply how much your salary increased, expressed as a percentage of your old salary, not a flat rupee number. A ₹80,000 increase sounds big in isolation, but whether it is good depends entirely on what you were earning before.
The formula is:
Hike % = ((New CTC − Old CTC) / Old CTC) × 100
Companies almost always talk in CTC (Cost to Company) terms, which includes your base pay, allowances, employer PF contribution, and bonuses, not just your monthly take-home. That matters because two offer letters with the same hike percentage can feel very different in your bank account if the bonus or variable pay component changes.
How to calculate your hike, step by step #
- Find your old CTC (last year's appraisal letter or offer letter, annual figure).
- Find your new CTC (this year's appraisal letter, annual figure).
- Subtract: New CTC minus Old CTC.
- Divide that difference by your Old CTC.
- Multiply by 100 to get a percentage.
You can do this by hand with a calculator app, but if your compensation structure has multiple components (fixed pay, variable pay, joining bonus, stock in the mix), it is easy to make an error. The salary hike percentage calculator does this instantly and also shows you the absolute rupee increase per month, which is often the number that actually matters for your budgeting.
Real example with Indian numbers #
Take Priya, a product manager in Pune earning a CTC of ₹14,00,000 last year. Her appraisal letter this year shows a new CTC of ₹16,10,000.
Using the formula:
- Difference: ₹16,10,000 − ₹14,00,000 = ₹2,10,000
- Hike %: (₹2,10,000 / ₹14,00,000) × 100 = 15%
A 15% hike sounds respectable, and it is above the general industry average in a typical year. But Priya also needs to check what changed inside that ₹2,10,000. If ₹1,20,000 of it is a new "performance bonus" component that depends on hitting targets, her guaranteed fixed pay hike is closer to 6.4%, not 15%. This is exactly the kind of detail that a headline percentage can hide, and it is worth five minutes with your payslip breakup to check.
What counts as a good hike in India #
Broad industry surveys (Deloitte, Aon, and Korn Ferry all publish annual India compensation trend reports) have typically pointed to average increments in the 9% to 10% range across sectors, with IT services trending lower (around 7 to 9%) and sectors like GCCs, BFSI, and consumer tech running slightly higher (10 to 12%) for strong performers. These figures shift year to year, so check the latest published report for the current appraisal cycle rather than relying on any single year's number.
Rough benchmarks to keep in mind:
| Hike range | What it usually signals |
|---|---|
| 0 to 5% | Cost-of-living adjustment, weak review cycle, or company under pressure |
| 6 to 10% | Standard "met expectations" hike in most sectors |
| 11 to 15% | Strong performer or role with market-driven pay correction |
| 16% and above | Promotion, high-demand skill, or you were significantly underpaid before |
If your hike sits meaningfully below your peer group for a similar role and experience level in your city, that is a signal worth raising in a conversation with your manager, not something to absorb quietly.
Common mistakes people make with appraisals #
Comparing gross hike numbers, not percentages. A ₹1,00,000 increase on a ₹20,00,000 CTC (5%) is smaller than a ₹60,000 increase on a ₹6,00,000 CTC (10%), even though the first number looks bigger.
Ignoring the fixed versus variable split. As in Priya's example above, a hike that is mostly loaded into variable pay or bonuses is not the same as a hike in guaranteed monthly income. Always check what portion of the increase actually shows up in your fixed pay.
Not accounting for inflation. A 6% hike when consumer inflation is running at 5% barely moves your real purchasing power. Treat any hike below 6 to 7% as roughly flat in real terms unless you have specific reasons to expect lower inflation ahead.
Signing the letter before checking take-home impact. A higher CTC does not always mean proportionally higher take-home pay, especially if more of the increase goes into employer PF contribution or a restructured HRA. Run the new numbers through an income tax calculator before you get excited about the top-line figure.
Tips for negotiating your appraisal #
Negotiating an appraisal is different from negotiating a new job offer, because you already have leverage in the form of your track record, but less leverage in the form of competing offers. Here is how to approach it well.
- Bring data, not feelings. "I delivered X, Y, and Z this year, and here is the market range for my role" lands better than "I feel undervalued."
- Know your market rate before the conversation. Check salary data on Glassdoor, AmbitionBox, or LinkedIn Salary for your role, city, and experience band, and quote a range, not a single number.
- Time it right. Raise concerns during the review conversation itself, before the letter is finalised. Once HR issues the letter, most companies treat that cycle as closed until the next one.
- Ask about the breakup, not just the total. If the number is fixed but the split is negotiable, ask for more of the hike in fixed pay rather than variable pay or one-time bonuses.
- If genuinely underpaid, get an external offer. Internal appraisals rarely close a large market gap on their own. A competing offer remains the single strongest negotiation lever in Indian corporate hiring.
Why the hike percentage matters beyond this year #
A hike percentage compounds over your career the same way an investment return does. Someone who consistently gets 12% hikes for 10 years ends up earning meaningfully more than someone getting 7% hikes, even if both started at the same salary. This is worth remembering when the hike you are negotiating feels like "just this year's number", because it resets the base for every future raise.
The extra income from a good hike is also worth putting to work rather than letting lifestyle inflation absorb it entirely. Even redirecting half of a hike into a SIP calculator projection or topping up your PPF calculator contribution can meaningfully change your long-term financial position, without changing how your monthly budget feels today.
Frequently asked questions #
How do I calculate my salary hike percentage? #
Subtract your old CTC from your new CTC, divide the result by your old CTC, and multiply by 100. For example, going from ₹10,00,000 to ₹11,20,000 is a hike of ((11,20,000 − 10,00,000) / 10,00,000) × 100, which works out to 12%. The salary hike percentage calculator does this for you instantly.
What is a good salary hike percentage in India? #
Industry-wide average increments have typically hovered around 9 to 10%, with IT services often lower and BFSI, GCCs, and consumer tech running a bit higher for strong performers. Anything above 12 to 15% typically reflects a promotion, a market correction, or an exceptional review. Check the latest Deloitte, Aon, or Korn Ferry India compensation trends report for the current cycle's numbers.
Does salary hike percentage apply to CTC or take-home pay? #
Companies almost always calculate and quote the hike percentage on CTC, not take-home pay. Since CTC includes employer PF contributions, bonuses, and other benefits, your actual monthly take-home increase can be smaller than the headline hike percentage suggests, so it is worth checking your revised payslip breakup separately.
Can I negotiate my salary hike after receiving the appraisal letter? #
It is possible but harder once the letter is issued, because most companies treat that review cycle as closed. The best time to negotiate is during the appraisal conversation itself, before the final number is locked in, using market data and your documented contributions as leverage.
Why did my hike percentage go down even though my responsibilities increased? #
This usually happens when a company is managing overall budget constraints, had a weaker business year, or restructured pay bands. It does not always reflect your individual performance. Compare your hike with market benchmarks for your role and raise it directly with your manager if the gap looks unreasonable.
Bringing it together #
A salary hike letter is not a number to accept at face value. Work out the real percentage, check how much of it lands in fixed pay versus variable pay, and compare it against what your role and experience command in the current market before you decide whether to celebrate, negotiate, or start looking elsewhere.
Run your own numbers through the salary hike percentage calculator the next time an appraisal letter lands in your inbox. It takes less than a minute, and it turns a vague feeling of "is this good?" into a clear percentage you can actually act on.