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Free template · Word and PDF · updated 6 Oct 2026

Increment letter format, with the old and new pay side by side.

A salary revision letter on letterhead, filled in here for Asha Rao's increment at Paiteq after the Q2 review, and blank below it. Both pay structures are shown in full, with the date the new one starts. Download it in Word, print it or save it as PDF, or copy the text onto your letterhead.

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Fill in your increment letter here

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Letterhead
Addressed to

___, [Department]

[Designation], ___

The letter

…your letter of appointment dated ___ stay as they are.

Your revised pay
Core term
Core term
Core term
Core term
Good practice
Good practice
Optional
Optional
Signed by

___, for [Company name]

0 of 23 filled

[Company name]

[Registered address] · [Phone or email]

Ref
[Reference number]
Date
[Date of issue]
[Employee's full name][Employee code][Designation], [Department]

Subject: Revision of salary

Dear [First name],

Following [the review / the annual revision], we are pleased to revise your salary from [effective date], as set out below.

Your revised pay

Designation
[Designation], [Department]; [unchanged / new designation from (date)]
Effective from
[Date]; first paid in the [month] salary
Monthly pay, before
[₹ total]: basic [₹], [each allowance and its amount]
Monthly pay, revised
[₹ total]: basic [₹], [each allowance and its amount]
Increase
[₹] a month on gross pay ([percentage]%)
Annual CTC, before and revised
[₹] → [₹] a year, each including employer PF of [₹] a year
Variable pay or bonus
[Unchanged / New terms, and how they are worked out]
Arrears
[None / ₹ for (months), paid with the (month) salary]

All other terms of your letter of appointment dated [date] stay as they are.

Please sign the copy below to confirm you have received this letter.

With best wishes,

[Name of the signatory][Designation], for [Company name]

Acknowledgement

I have received this letter and note my revised pay from the date above.

Employee's signatureNameDate

The filled sample and the blank, with a margin note on every field

Paiteq Technologies

Bengaluru, Karnataka

Ref
PTQ/REV/2026/004
Date
Thu 1 Oct 2026
Asha RaoPTQ-0021Senior Software Engineer, Engineering

Subject: Revision of salary

Dear Asha,

Following your Q2 review · FY 2026-27, we are pleased to revise your salary from Thu 1 Oct 2026, as set out below.

Your revised pay

Designation
Senior Software Engineer, Engineering; unchanged
Core termbecause a revision with a promotion should say so, with the date the new title starts.
Effective from
Thu 1 Oct 2026; first paid in the October 2026 salary
Core termbecause payroll needs the date, and the person needs to know which month's slip will show it first.
Monthly pay, before
₹96,600: basic ₹50,000, special allowance ₹25,000,
HRA ₹20,000, conveyance ₹1,600
Core termbecause the old pay, component by component, lets the person see exactly what moved.
Monthly pay, revised
₹1,06,100: basic ₹55,000, special allowance ₹27,500,
HRA ₹22,000, conveyance ₹1,600
Core termbecause the components decide take-home, PF and ESI. A single new total hides all three.
Increase
₹9,500 a month on gross pay (9.8%)
Good practicebecause a percentage on gross pay and a percentage on CTC are different numbers. Say which one you mean. Gross pay rises by this amount; take-home rises by less where TDS applies, because TDS for the rest of the year is recalculated from the first revised slip.
Annual CTC, before and revised
₹11,95,200 → ₹13,09,200 a year, each including
employer PF of ₹36,000 a year
Good practicebecause employer PF is part of CTC. Asha's PF wages are above the ceiling of ₹25,000, so her employer PF stays the same and the whole rise reaches gross pay. This assumes PF is paid on wages up to the ceiling. If your company pays PF on full wages, the rise moves PF and CTC too; say which in the letter.
Variable pay or bonus
Unchanged
Optionalbecause a revision letter that is silent on the bonus starts a question at the next payout.
Arrears
None
Optionalbecause a revision dated back needs the arrears amount and the month they will be paid.

All other terms of your letter of appointment stay as they are.

Please sign the copy below to confirm you have received this letter.

With best wishes,

Meenal JoshiFounder, for Paiteq Technologies

Acknowledgement

I have received this letter and note my revised pay from the date above.

Employee's signatureNameDate

Paiteq Technologies

[Registered address] · [Phone or email]

Ref
[Reference number]
Date
[Date of issue]
[Employee's full name][Employee code][Designation], [Department]

Subject: Revision of salary

Dear [First name],

Following [the review / the annual revision], we are pleased to revise your salary from [effective date], as set out below.

Your revised pay

Designation
[Designation], [Department]; [unchanged / new designation from (date)]
Core termbecause a revision with a promotion should say so, with the date the new title starts.
Effective from
[Date]; first paid in the [month] salary
Core termbecause payroll needs the date, and the person needs to know which month's slip will show it first.
Monthly pay, before
[₹ total]: basic [₹], [each allowance and its amount]
Core termbecause the old pay, component by component, lets the person see exactly what moved.
Monthly pay, revised
[₹ total]: basic [₹], [each allowance and its amount]
Core termbecause the components decide take-home, PF and ESI. A single new total hides all three.
Increase
[₹] a month on gross pay ([percentage]%)
Good practicebecause a percentage on gross pay and a percentage on CTC are different numbers. Say which one you mean. Gross pay rises by this amount; take-home rises by less where TDS applies, because TDS for the rest of the year is recalculated from the first revised slip.
Annual CTC, before and revised
[₹] → [₹] a year, each including employer PF of [₹] a year
Good practicebecause employer PF is part of CTC. Asha's PF wages are above the ceiling of ₹25,000, so her employer PF stays the same and the whole rise reaches gross pay. This assumes PF is paid on wages up to the ceiling. If your company pays PF on full wages, the rise moves PF and CTC too; say which in the letter.
Variable pay or bonus
[Unchanged / New terms, and how they are worked out]
Optionalbecause a revision letter that is silent on the bonus starts a question at the next payout.
Arrears
[None / ₹ for (months), paid with the (month) salary]
Optionalbecause a revision dated back needs the arrears amount and the month they will be paid.

All other terms of your letter of appointment dated [date] stay as they are.

Please sign the copy below to confirm you have received this letter.

With best wishes,

[Name of the signatory][Designation], for [Company name]

Acknowledgement

I have received this letter and note my revised pay from the date above.

Employee's signatureNameDate

Design preview · sample data · Paiteq Technologies. Margin notes never print.

Good practice; no Labour Code requires an increment letter · PF on Code wages, Ministry of Labour & Employment, Additional FAQs on Labour Codes (as on 16.03.2026), reply 7 · EPF wage ceiling ₹25,000 from 17 Sep 2026 · reviewed 6 Oct 2026

No. 01

Line by line

What changed, component by component.

Asha's gross pay rose by ₹9,500 a month (9.8%). This is how each line moved, and why the split matters for PF and the other contributions.

Asha Rao: before and from Thu 1 Oct 2026

Code wages went from ₹75,000 to ₹82,500 a month, with no add-back either side, because the excluded parts stay under half of total remuneration. Payroll in LekhaHR uses the new structure from the effective date, and the slip shows the revised components.

Basic
₹50,000 → ₹55,000

because it counts towards Code wages, so PF, ESI and gratuity are worked on it.

Special allowance
₹25,000 → ₹27,500

because it counts towards Code wages, so PF, ESI and gratuity are worked on it.

HRA
₹20,000 → ₹22,000

because it is an excluded part of pay, added back to wages only above half of total remuneration.

Conveyance
₹1,600, unchanged

because it is an excluded part of pay, added back to wages only above half of total remuneration.

With a promotion, or dated back

Change these lines of the blank. A revision decided in a performance review is easier to explain when the letter names the review it follows.

Designation
new title, from (date)

because the title and the pay may change on different dates. Give each its own date.

Effective from
the agreed date

because a date in the past means months already paid on the old structure. Those become arrears.

Arrears
amount and month

because the person should know what will be paid, for which months, and in which salary.

Opening line
name the review

because 'following your Q2 review' ties the letter to the record. Paiteq's cycle closed on Thu 1 Oct.

No. 02

Field by field

What to write in each field.

An increment letter changes the pay in the appointment letter. Every field answers one question: what moved, by how much, and from when.

01Designation
Core term

because a revision with a promotion should say so, with the date the new title starts.

02Effective from
Core term

because payroll needs the date, and the person needs to know which month's slip will show it first.

03Monthly pay, before
Core term

because the old pay, component by component, lets the person see exactly what moved.

04Monthly pay, revised
Core term

because the components decide take-home, PF and ESI. A single new total hides all three.

05Increase
Good practice

because a percentage on gross pay and a percentage on CTC are different numbers. Say which one you mean. Gross pay rises by this amount; take-home rises by less where TDS applies, because TDS for the rest of the year is recalculated from the first revised slip.

06Annual CTC, before and revised
Good practice

because employer PF is part of CTC. Asha's PF wages are above the ceiling of ₹25,000, so her employer PF stays the same and the whole rise reaches gross pay. This assumes PF is paid on wages up to the ceiling. If your company pays PF on full wages, the rise moves PF and CTC too; say which in the letter.

07Variable pay or bonus
Optional

because a revision letter that is silent on the bonus starts a question at the next payout.

08Arrears
Optional

because a revision dated back needs the arrears amount and the month they will be paid.

No. 03

The rule

Does a salary increment change PF and other contributions?

Often, yes. PF and ESI are worked on wages as the Code on Social Security defines them: basic, DA and allowances that aren't excluded, with excluded parts such as HRA added back where they pass half of total remuneration. A rise in those lines raises PF until PF wages reach the ceiling of ₹25,000, in force from 17 Sep 2026. A rise loaded into HRA can trigger the add-back. Show every component in the letter.

Increment letter
good practice

because no Labour Code requires one, but it changes the pay terms of the appointment letter, which should be in writing.

PF wages
Code wages, to the ceiling

because Ministry of Labour & Employment, Additional FAQs on Labour Codes (as on 16.03.2026), reply 7 puts PF on Code wages. Asha's are above ₹25,000, so her PF did not change.

The 50% test
add-back above half

because excluded parts above half of total remuneration are added back to wages; total remuneration includes employer PF (Ministry of Labour & Employment, Additional FAQs on Labour Codes (as on 16.03.2026), reply 1(a) and 1(b)).

CTC
₹11,95,200 → ₹13,09,200

because CTC adds employer PF to gross pay. Quote it labelled, beside the monthly figures, never instead of them.

No. 04

Questions answered

How do you write an increment letter?

Open with the reason and the date it takes effect, then give the designation, the old pay and the new pay component by component, the rise in rupees and as a percentage, and any change to variable pay or arrears. Close by saying the other terms are unchanged, and ask for a signed copy. Payroll in LekhaHR applies the new structure from the date in the letter.

How is an increment percentage calculated?

The rise divided by the old figure, times 100, on the same basis both times. Asha's rise is ₹9,500 on a gross of ₹96,600: 9.8%. Worked on CTC the figure differs, because employer PF sits in CTC. The salary slip shows the new gross from the first month it applies, and the salary hike calculator shows what the rise does to in-hand.

Should an increment follow a performance review?

Most small companies revise in April, with the financial year, and decide in May or June, so the letter arrives with April's arrears. The rule: issue it before the effective date, or state the arrears and the salary they will be paid with. Keep the review's outcome and the pay decision as separate records, so the letter states the pay and the performance review holds the reasons.

No. 05

Common mistakes

Six ways an increment letter causes trouble.

Most surface on the first slip after the revision.

01A new CTC with no breakup

because nobody can tell how much reaches take-home, or which lines PF and ESI are worked on.

02A percentage with no base

because 10% on CTC and 10% on gross pay are different rises.

03No effective date

because payroll has to guess the month, and arrears go unpaid or paid twice.

04The whole rise in HRA

because excluded parts above half of total remuneration are added back to wages, so PF and gratuity may still move.

05A rise that crosses a line, unannounced

because Code wages above ₹21,000 end ESI cover at the end of the contribution period, so tell the person their family's ESI medical cover stops then. In Karnataka, gross pay reaching ₹25,000 brings professional tax.

06No signed copy on file

because a later question about what was agreed has nothing to check against. Keep the person's signed copy, not just the sent email.

No. 06

Questions

Questions about increment letters

Is an increment letter mandatory?

No Labour Code requires one. A change of pay is a change to the terms in the appointment letter, though, so put it in writing, with the date it takes effect and both the old and new pay. A signed copy on file settles any later question about what was agreed.

What is the difference between an increment letter and a promotion letter?

An increment letter changes pay. A promotion letter changes the role, and usually the pay with it. If both change, one letter can carry both: the new designation from its date, then the old and new pay. Keep the effective dates separate if they differ.

When should an increment letter be issued?

On or before the date the new pay takes effect, so the person knows before the slip arrives. If the revision is decided late and dated back, issue it as soon as it is decided, with the arrears and the month they will be paid. Most policies withhold the increment from someone serving notice or still on probation; write that into the policy, so it isn't argued person by person.

Should an increment letter show the percentage?

Yes, and say what it is a percentage of. A rise on monthly gross pay and a rise on CTC give different figures, because employer PF is in one and not the other. The sample gives the rise on gross pay.

How do I calculate a 20% increment?

Multiply the current figure by 0.20 for the rise, or by 1.20 for the new figure, and say which figure you started from. On Asha's old gross of ₹96,600 a month, a 20% rise would be ₹19,320, making ₹1,15,920. The same 20% on CTC gives a different rupee figure, because CTC includes employer PF. Then split the new figure into components, because where the rise goes decides PF, ESI and take-home.

Can an employer reduce salary in an increment letter?

A cut is not an increment, and a change that reduces pay needs the employee's agreement. For workers, a change in wages can also call for advance notice of change under the Industrial Relations Code, 2020; confirm the notice and its scope with your adviser before any cut. Don't fold a reduction in one component into a revision letter without saying so plainly. Show each component before and after, so any line that falls is visible.

Is there an increment letter format in Word?

Yes. Fill it in with the letter builder at the top of this page and download it as a filled Word (.docx) file, or print it or save it as PDF; nothing you type leaves your browser. The blank Word file is there too, with no email and no sign-up, and the filled sample shows a revision with both pay structures.

For employersLekhaHR is HR and payroll software for small Indian teams. See payroll →