The mean salary in ICM LTD. was Rs. 1,500, and the standard deviation was Rs. 400. A year later
each employee got a Rs. 100 raise. After another year each employee’s salary (including the above mentioned raise) was increased by 20%. The standard deviation of the current salary is:

Standard deviation is the measure of how much the values in the group differ from the average. 
If the salary of each person is increased by 100, the average salary will also be increased by 100. Therefore, the standard deviation will remain unaltered in this case. 
Every person is given a hike of 20%. Therefore, the standard deviation will also increase by 20%. Therefore, the new standard deviation will be 1.2*400 = 480. Therefore, option B is the right answer.