Free HR resource · Compensation
Appraisal Letter Format: Free Salary Increment Template
An appraisal — or increment — letter confirms a revised salary, and sometimes a revised role, after a performance review. A clear one states the new annual CTC, the previous figure, the effective date and a reference to the updated salary break-up, and confirms that all other terms stay unchanged. Copy the template below, fill the brackets, and attach the revised break-up as Annexure A.
Appraisal / increment letter template
A concise, general-purpose format for a salary revision. Replace everything in square brackets, and attach the revised salary break-up as Annexure A.
What every appraisal letter should include
A good salary-revision letter is short, but it should leave no room for doubt about what changed, from when, and by how much. These eight elements cover it.
- 1
Effective date of the revision
State clearly the date from which the revised salary applies, in DD-MMM-YYYY format, so payroll and the employee agree on when it takes effect.
- 2
Previous and revised CTC
Show both the old and the new annual cost-to-company, so the increment is transparent and there is no ambiguity about the change.
- 3
Revised salary break-up reference
Refer to an updated annexure that breaks the new CTC into basic, allowances, employer contributions and any variable component.
- 4
Designation or role change
If the appraisal comes with a promotion, state the new designation and, where relevant, the revised reporting line.
- 5
Performance context
A brief line recognising the employee’s contribution or performance rating gives the letter meaning beyond the numbers.
- 6
Variable pay or bonus
If a performance bonus or revised variable component applies, note it and how it is earned.
- 7
Other terms unchanged
State that all other terms of the original appointment remain in force, so the letter does not accidentally reopen the whole contract.
- 8
Signatory and acknowledgement
Sign the letter and provide an acknowledgement line so the employee can confirm receipt of the revision.
Retention is more than the number
A raise keeps people. So do the benefits
An increment is the headline, but employees weigh the whole package — and strong benefits are what make an appraisal feel like real recognition rather than a cost-of-living catch-up. A visible group health insurance plan, alongside the pay rise, signals long-term investment in your team. Size the change accurately with the CTC calculator before you finalise the revised break-up.
Frequently asked questions
What is an appraisal letter?
An appraisal letter is the document an employer issues after a performance review to confirm a revised salary, and sometimes a revised designation. It states the new annual CTC, the effective date and a reference to the updated salary break-up, while confirming that the other terms of the original appointment stay unchanged.
What is the difference between an appraisal letter and an increment letter?
The two terms are largely interchangeable in Indian workplaces. Strictly, an appraisal letter records the outcome of the performance review, while an increment letter focuses on the pay rise itself. Most employers combine the two in a single salary-revision letter that names the revised CTC and its effective date.
How should an employer communicate an increment?
Best practice is to hold a short review conversation first, then issue the written appraisal letter confirming the revised CTC and effective date, with an updated salary break-up attached. Putting the revision in writing avoids confusion at payroll and gives the employee a clear record of the change.
Should an appraisal letter restate the employee’s benefits?
It is good practice to remind the employee of the benefits that continue — group health insurance, Provident Fund and other cover — even though these usually sit unchanged. A short line keeps the total value of the package visible, not just the salary figure.
Does a revised CTC need a fresh salary break-up?
Yes. Whenever the CTC changes, attach an updated annexure that re-splits the new figure into basic pay, allowances such as HRA, employer contributions like PF, and any variable component. This prevents the common gap between the headline increment and the change the employee actually sees in take-home pay.
General guidance, not legal or tax advice. Confirm the revised break-up with your payroll team before you issue the letter.
Make the appraisal about more than salary
The increment retains this year. Benefits your team actually uses retain for the long run. Give them cashless group health, OPD and wellness with Onsurity — on a monthly subscription you can start in days.
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