How To Calculate Hike Percentage In CTC
A pay raise is a nice thing, especially if you work for a private company and have a family that relies on you. When most private sector companies offer increments in salary, they either tell you the absolute amount or the percentage hike. And if you know the absolute salary amount, then you can easily calculate the hike percentage with the old salary, new salary, and their difference. If you don’t know how you can calculate the hike percentage in CTC salary, then keep on reading today’s post because you are about to find that out.
What Is CTC Salary?
The concept of CTC salary isn’t country-specific, it is being used in many countries like India, South Africa, etc. CTC stands for Cost To Company, and it is basically the total amount that a particular company spends on an employee annually or monthly. So if you prefer a CTC salary, then the company includes all the expenses they do for your convenience and comfort as well.
What Is Hike Percentage?
The hike percentage is simply the percentage of increment increase in your salary. And it is not so complicated to calculate the hike percentage. The formula for calculating the hike percentage is pretty simple. Simply, take your new salary amount, and minus the old salary amount from it. Now you should have the difference between your new salary and your old salary. Simply divide the difference amount by the old salary, and then multiply the result by 100. And there you have it, the result you have is actually the hike percentage that you have just calculated on your own. But keep in mind that with CTC you don’t get the total amount in your bank account, there are a lot of things that get deducted, and the final amount you get in your bank account is much lower.
(New salary amount – Old salary amount) / Old Salary x 100 = Hike percentage
For example, if an employee’s Old CTC was Rs.5,00,000, and their New CTC after a salary hike is Rs.5,50,000:
Hike Percentage = [Rs.5,50,000 – Rs.5,00,000) / Rs.5,00,000] * 100
Hike Percentage = (Rs.50,000 / Rs.5,00,000) * 100
Hike Percentage = (0.10) * 100
Hike Percentage = 10%
So, in this example, the employee received a 10% hike in their CTC in INR. This means their new CTC is 10% higher than their old CTC, and the hike percentage is 10%.
Actual Calculation Of Hike Percentage In CTC
In order to understand a concept or formula better, you must take a look at the practical example, otherwise, you may feel a little confused in your head. Let’s have a look at the practical example of how you can calculate the hike percentage in CTC.
Suppose that Rahul is a person who works in a company, and he’s been working there for just over a year now. His current salary is Rs. 50,000. Since Rahul is a good and hardworking employee, he got an increment at his company. And now his salary is Rs. 65,000. Now Rahul wants to calculate his hike percentage. So he minus his old salary from his current salary amount, and he is now left with an Rs.15,000 difference. Now in order to calculate the hike percentage, he needs to divide this difference amount by his old salary and multiply by 100. So when he divides Rs. 15,000 by Rs. 50,000, he gets 0.3 as a result. And by multiplying 0.3 by 100, he is left with 30. And that is it, in Rahul’s case, the hike percentage in CTC is 30%.
However, keep in mind that it is a CTC salary, so the total in-hand or take-home amount will be much lower. So whenever you get an increment in your CTC salary, you should ask yourself or the employer how much money you’ll actually get in your bank account after all the deductions. If you have a PF account, then around 12% of your monthly salary will be deducted and credited to your PF account.
Jessica
Jessica is a Founder and Editor of InvestmentCage, A Business & Finance Magazine. She is a MBA graduate in Business Studies, loves to write articles on Business, Insurance and Investment topics.
