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TOOL

Notice buyout

Shortfall days minus leave. 26- or 30-day month. Optional perk / joining-bonus TDS. Updates as you type.

Shortfall days

60

Gross buyout

₹2,00,000

Leave credit

₹33,333

You owe old employer

₹1,66,667

What the settlement is

(required − served) × monthly ÷ divisor − leave × monthly ÷ divisor

Competitors often run that on CTC. CTC includes PF, gratuity accrual, and insurance the company never recovers. Type Basic or gross — whichever the clause names. If the letter is silent, ask HR which number they put in the F&F worksheet before you accept their debit.

Leave is the usual offset. Some handbooks only allow privilege leave, not sick leave. Type the days they will actually encash. A negative net means they owe you; that credit is still salary in the year you receive it.

When the new company writes the cheque

A buyout paid to your old employer on your behalf is almost always a perquisite. The value is the net you would have paid. Without gross-up, TDS comes out of some other component that month. With gross-up, the company inflates the perk so that after TDS the settlement still clears.

Joining bonus is simpler: it is salary. The rate box is whatever slab / surcharge your first payroll month will use — this is not a second income-tax engine. For a full CTC picture after you join, use the income tax calculator.

Worked example — the default inputs

₹1,00,000 a month. 90 days required, 30 served, 10 days leave. Divisor 30.

  • Shortfall 60 days × ₹3,333.33 = ₹2,00,000
  • Leave 10 × ₹3,333.33 = ₹33,333
  • You owe ₹1,66,667
  • Switch divisor to 26 and the buyout jumps to ₹2,30,769

Questions people actually ask

Is buyout calculated on CTC or on Basic?

The appointment letter wins. Most IT offers recover notice on gross monthly salary; some recover on Basic only. This page does not guess — type the figure your HR mail uses.

Why 26 days versus 30 days?

30 is a calendar month. 26 is a working-day month (the same idea as gratuity’s 15/26). A 26-day divisor makes every recovered day more expensive. Toggle both and see which one matches the clause.

Can leftover privilege leave cancel the notice shortfall?

Often, if the policy says so. This page subtracts leave value from the buyout. If leave is worth more than the shortfall, the company owes you the difference as encashment — that is still taxable as salary.

If my new employer pays the old one, is that tax-free?

Usually not. A third party settling your contractual debt is typically a perquisite under Section 17(2). Tick “new employer pays.” The perk equals the net you would have paid. Gross-up if the offer promised the settlement tax-free.

How does joining-bonus TDS work?

A joining bonus is salary. Without gross-up, TDS is rate × bonus and you take home the rest. With gross-up, the company books bonus ÷ (1 − rate) so that after TDS you still see the promised number.

Does serving 60 of 90 days mean I pay for 30?

Yes — shortfall days × (monthly ÷ divisor), then minus leave. Serving more than required is just zero shortfall; this page will not invent a bonus for extra days.

Is garden leave the same as serving notice?

If you remain on payroll and cannot join elsewhere, most letters treat it as served. Type those days under “served.” Confirm with the relieving letter, not with this page.

Will HR accept this number?

Use it to check their spreadsheet. Full-and-final also pulls in unpaid expenses, joining-bonus clawback, and bond clauses this tool ignores.

Estimate only

Bonds, training-cost recovery, laptop debit, and joining-bonus clawback are not in this page. The letter and the F&F sheet are the source of truth.

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