FY 2026-27 · Marginal tax included

Notice period calculator India 2026: buyout and last working day

Work out how much it costs to buy out your notice period, with tax at your marginal rate, and the date your notice ends. Free, no sign-up.

Monthly CTC (₹)

₹

Your gross monthly cost to company

Notice Period Length

Total Notice Period (days)

days

Days Already Served

days

50 days remaining

Tax Regime (FY 2026-27)

Notice Period Buyout

Gross Amount

₹1,92,300

Real cost after tax

₹1,92,300

50 days remaining · 10% marginal tax rate

Daily Rate (CTC / 26)

₹3,846/day

Days Remaining

50 working days

Gross Buyout

₹1,92,300

Tax you no longer pay on it (~10% slab)

−₹0

Real cost to you

₹1,92,300

Assumes your employer recovers the buyout from your final salary. In Nandinho Rebello v. DCIT (ITAT Ahmedabad, 2017) the tribunal held you are taxed only on the salary you actually received, so the buyout is not taxed. The relief shown is an estimate from your slab. If you pay the buyout separately, or your Form 16 shows the full salary, check with a tax adviser before you file.

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Notice period calculator: your last working day

Enter the day your resignation is accepted and your notice period. Most employers count that day as day one.

Resignation accepted on

Notice period

Last working day

Enter a date and a notice period of up to 365 days or 12 months.

How notice period buyout works

What you actually pay, how it is taxed, and how to reduce the cost.

You pay for the days you don't serve

Notice period buyout compensates your employer for the days remaining after your last working day. It is calculated as your daily CTC rate (monthly salary / 26) multiplied by remaining working days.

You are not taxed on it

When the buyout comes out of your final salary, you are taxed only on the salary you actually received (Nandinho Rebello v. DCIT, ITAT Ahmedabad, 2017). So its real cost is the buyout minus the tax that salary would have carried.

New employer may cover it

In competitive hiring, many employers offer joining bonuses specifically to cover notice period costs. Always negotiate this upfront, before signing the offer letter, not after you've resigned.

Example: ₹1.2L/month CTC, 60-day notice, 10 days served

Daily rate: ₹1,20,000 / 26 = ₹4,615/day. Days remaining: 50. Gross buyout: ₹2,30,750. Taking it off a ₹14.4L year brings taxable salary under ₹12L, where the new-regime rebate removes the tax entirely, so the tax you no longer pay is about ₹80,448 and the real cost is about ₹1,50,302. Further from the ₹12L line the saving is closer to your slab rate times the buyout. Compare this to asking your new employer for a ₹2.3L joining bonus to offset the cost.

Notice period buyout by CTC, quick reference

Gross buyout for 30 remaining days at different salary levels (new regime).

₹5L/yr (₹41.7K/month)

₹48,077

₹10L/yr (₹83.3K/month)

₹96,154

₹15L/yr (₹1.25L/month)

₹1,44,231

₹20L/yr (₹1.67L/month)

₹1,92,308

₹30L/yr (₹2.5L/month)

₹2,88,462

₹50L/yr (₹4.17L/month)

₹4,80,769

Formula: (Monthly CTC / 26) × 30 days

Ways to reduce your buyout cost

Negotiate early release

Ask your manager before resigning formally

Get new employer to pay

Negotiate joining bonus = buyout amount

Use earned leaves

Adjust remaining leaves against notice days

Mutual separation

Formal agreement to waive notice without buyout

Transfer within group

Internal moves often have waived notice periods

Ready to resign? Write the letter with the free resignation letter generator.

Questions

Frequently asked questions

Everything about notice period buyout in India.

How do I calculate my last working day in the notice period?

Count the day your resignation is accepted as day one and add your notice period. A 90-day notice from 1 January ends on 31 March. A notice stated in months ends the day before the same date that many months later, so a two-month notice from 15 January ends on 14 March. Some employers start counting the next day, which moves the date by one, so check your offer letter or HR policy.

How is notice period buyout calculated in India?

Notice period buyout = (Monthly CTC / 26) × remaining working days. Most companies use 26 working days per month. If your monthly CTC is ₹1,00,000 and you have 20 days remaining, the gross buyout is ₹76,923. Your employer deducts this from your full & final settlement or you pay it separately.

Is notice period buyout taxable?

Not when it is recovered from your salary. In Nandinho Rebello v. DCIT (ITAT Ahmedabad, ITA 2378/Ahd/2013, order of 18 April 2017), the tribunal held that notice pay deducted from salary was never the employee's income, so only the salary actually received is taxed. That makes the real cost of a buyout the gross amount minus the tax that salary would have carried. The ruling dealt with a deduction from salary; if you pay the buyout separately after leaving, or your Form 16 still shows the full salary, check with a tax adviser before filing.

Can my new employer pay the notice period buyout?

Yes, in competitive markets, especially IT, many employers offer joining bonuses that cover buyout costs. This is negotiable at the offer stage. Ask explicitly. Note that a joining bonus paid by your new employer is also taxable income, so factor that in when comparing.

What happens if I leave without serving notice?

Your employer can withhold your full & final settlement, experience letter, and relieving letter. In extreme cases they can file a civil suit for recovery of the buyout amount. Always pay the buyout or get a written waiver before your last working day.

What is the standard notice period in India?

30 days for junior/mid-level roles, 60–90 days for senior roles, and up to 3–6 months for leadership positions. IT and BFSI companies typically enforce 60–90 day periods. Always check your appointment letter for the exact contractual obligation.

Can I negotiate a shorter notice period instead of paying buyout?

Yes. Many employers allow early release by mutual agreement, especially if your replacement has been identified. This is the best outcome: you serve a shorter period, your employer waives the remainder, and no money changes hands. Approach your manager early and in writing.

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