Ramdev,
Here is what I recommend. Let your manager know that you want to leave the company to explore other opportunities. Agree with your manager on a transition plan and a notice period. Then send a formal resignation letter. Below is a real resignation letter I sent to one of my managers in the past (of course, it was an email and it was copied to her manager) (and I was not going to take up another job with better pay, I was going from a full-time employment to independent consulting).
I sent this on a Friday at 5 PM (close of business, end of the week).
Lucy,
I would like to inform you that I will be leaving <abc company> shortly. It has been an incredible couple of years here, and <abc company> is indeed the best place to work.
However, I believe it is time for me to move on and explore other opportunities.
I offer my heartfelt thanks to you and <abc company> for giving me an opportunity to work here and get to know all of you. It has been an excellent experience. Perhaps such an opportunity may present itself in the future.
As mutually agreed, starting Monday, April 20, 2009, I will be serving my two weeks' notice period. My last day at <abc company> would be April 3, 2009.
Thank you once again.
Regards,
-Som G
Hope this helps.
My manager and peers asked me, "where are you going?", and I said, "I don't know yet. I have a couple of offers, but haven't made up my mind. I am thinking of taking some time off and then get back to work. Or I might go to India and spend some time there. I don't know." What I said was actually true (I did take about 5 months off and drove across the country visiting friends and family, and then got back to a consulting gig). You can take your pointers from the first two statements.
All the best,
-Som G