To calculate salary hike following data needs to be taken in to account salary is a form of periodic payment from an employer (government, institution, organization). So final net salary can be calculated as the basic salary grade pay miscellaneous allowances.p
Following are definitions terms used in calculation
Basic salary- basic pay without including allowances, for example if your pay scale is 5200-20200 grade pay 2000 then your pay will be 5200+2000= 7200.
DA ( Dearness Allowances)- calculated as a percentage on basic salary, it increases from time to time in presents time it is 120 %b of basic salary.
HRA ( House rent allowance)- HRA given to the employee for accommodation rent, but it will be different in urban and rural areas but approximately HRA is half of pay band, for example employee pay band is 2000 then he/she will get approximately 1000-1200 as a house rent.
TA (Travelling allowances) - TA stand for travelling allowances given when employee travel for business purpose.
Allowances are provided depending upon the establishment/ company rules
To calculate salary hike let’s consider following example
These are the rates of a government employee and the rates are according to the 7th pay commission
Assuming following rates
Rs 5200 = the minimum starting basic salary for employee
20200= the maximum salary paid to the employee
Rs 1800 = The Grade Pay based on your rank
When employee is appointed in this pay scale, Basic Salary for the purpose of increment will be:
Rs 5200 + 1800 = 7000
Next year, he/she will be given an increment of 3% i.e. = 3% of 7000 = 210
Hence the basic salary for the next year will be = Rs 5200 +Rs 210 = 5410
In the same way, employee will be getting increment every year till he/she reaches the upper limit of Rs 20200
Work out the difference (increase) between the two salaries i.e.
Increase of salary = New salary - Original salary or old salary
Then: divide the increase by the original number and multiply the answer by 100.
% salary increase = Increase of salary ÷ Original salary × 100.
Salary hike Percentage formula = ((percentage of new salary- old salary)/ old salary) x100
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