Salary Increment Letter Format
Inform an employee of a salary revision after an appraisal, with the old and new CTC and the date from which it applies.
What it is
An increment letter records a revision in an employee's pay. It states the previous and revised annual CTC, the effective date and, usually, the reason: annual review, performance, promotion or a market correction. It also confirms that the other terms of the appointment letter continue. A clear letter avoids disputes about arrears and helps payroll update the salary, PF, ESI and TDS from the right month.
When it is used
- After the annual performance appraisal.
- A mid-year correction to retain an employee.
- Revising pay to stay above the notified minimum wage.
- Recording a revision agreed in a promotion discussion.
What the template covers
- Employee name, ID and current designation
- Previous and revised annual CTC
- Effective date of the revision
- Reason for the increment
- Confidentiality of compensation
- Other terms unchanged, signature and acknowledgement
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Letter
Letter Date
Company
Company Name; Company Address; Signatory Name; Signatory Title
Employee
Employee Name; Employee ID; Current Designation
Compensation
Previous Annual CTC (₹); New Annual CTC (₹); Effective Date; Reason
Stamp duty, registration and filing
No stamp duty or registration is needed; issue it on letterhead signed by an authorised person. Under the Code on Wages, 2019 (in force from 21 November 2025), if allowances excluded from "wages" exceed half of the total pay, the excess is treated as wages, which affects PF, gratuity and bonus. Check the revised structure against that rule and against the notified minimum wage for the State. TDS on salary is recomputed from the month the increment is paid.
Generate the Salary Increment Letter
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows (e.g. PF, ESI, TDS on salary)? Contact SKAG and Associates
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Frequently asked questions
Is an increment letter legally required?
There is no statutory format, but a written record of the revised pay is good practice and supports payroll, PF and tax records.
Should the letter show the full salary break-up?
Many employers attach a revised salary annexure showing basic pay, allowances and employer contributions, so that the CTC is clear.
How are arrears handled if the increment is backdated?
The difference for the past months is paid as arrears and taxed in the year of receipt; the employee may claim relief for arrears relating to earlier years.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.