What is the Salary Hike?
A salary hike is straightforward arithmetic, but the number that matters is the real hike — your increment minus inflation. A 6% raise when inflation is 6% leaves your purchasing power exactly where it was.
The projection table shows the compounding effect of repeated increments, and — in the last column — what each future salary is actually worth in today's rupees.
Formula & worked example
Nominal and real:
Real hike = hike% − inflation%
Today's value = Future salary / (1 + inflation)n
Worked example: ₹12,00,000 with a 15% hike → ₹13,80,000, an increase of ₹1.8 lakh or ₹15,000 a month. With inflation at 6%, the real hike is 9%, worth about ₹1.08 lakh in genuine purchasing power. Repeated for five years, the salary reaches ₹24.1 lakh — but only about ₹18 lakh in today's money.
How to use this salary hike calculator
- Enter your current annual salary or CTC.
- Enter the hike percentage offered.
- Set inflation — India's CPI has averaged 5–6% recently.
- Use the table to see whether repeated increments actually build wealth or just track prices.
Smart tips
- Anything below inflation is a real pay cut, no matter how the increment letter is worded.
- Job switches typically deliver 20–40% versus 8–12% for internal increments — the single biggest lever on lifetime earnings.
- Compare offers on fixed in-hand, not CTC. A high-variable package can mean less real money.
- Raise your SIP by the full increment amount before lifestyle absorbs it — this is what a step-up SIP automates.
Frequently asked questions
How do I calculate a salary hike percentage?
Divide the increase by your old salary and multiply by 100. From ₹12 lakh to ₹13.8 lakh: (1.8 / 12) × 100 = 15%.
What is a good salary hike in India?
Internal increments average 8–12%. Switching jobs typically brings 20–40%. Anything under inflation is effectively a cut.
Is a 30% hike on switching worth it?
Usually yes financially, but check fixed versus variable split, the new role's stability, and any notice-period or joining-bonus clawback.
How does inflation affect my raise?
It erodes it directly. A 10% hike with 6% inflation is a 4% real gain, which is what actually improves your standard of living.
Want the theory behind the numbers? Read our salary guides on the Money Blog.