How notice-period buyout is actually calculated

A new job wants you in three weeks. Your current contract needs sixty days' notice. The gap between those two numbers has a price, and it's usually simpler to calculate than people expect — the confusion is almost always about which inputs to use, not the math itself.

The formula

(Monthly salary ÷ 30) × shortfall days. If your required notice is 60 days and you can only serve 20, the shortfall is 40 days. At a monthly salary of ₹90,000, that's ₹3,000/day × 40 days = ₹1,20,000.

Why 30 days, even in February

This is a payroll convention, not a calendar fact. Nearly every Indian employer divides by a flat 30, regardless of whether the month you're leaving in actually has 28, 30, or 31 days. It's simpler for HR systems to standardize, and it's what almost every notice clause implicitly assumes even when the offer letter doesn't spell it out.

Gross salary or basic salary — check which one applies

This is where the real variation happens. Most companies use gross monthly salary, which makes the buyout larger. Some — more often for senior or high-variable-pay roles — use basic salary only. The difference between the two can be substantial if a large share of your CTC is variable pay or allowances, so it's worth confirming rather than assuming.

Does the buyout get taxed?

No. It's a straightforward cash deduction from your final settlement, or a payment you make directly — not income, so it isn't subject to income tax the way a bonus would be. It's a pure cost, which is exactly why it belongs in the "one-time" column of any job-switch decision, not mixed in with recurring tax effects.

Know your notice period and how much you can actually serve? The notice-period buyout calculator gives you the exact number, and the job offer comparison tool folds it into a full switching decision.