How To Do
Notice Period & FNF Calculator
Switching jobs? Compute the buyout you owe (or receive), leave encashment, gratuity if eligible, and the net full-and-final (FNF) settlement — with tax treatment per component.
Salary basics
Notice period
Other FNF components
Gratuity (if eligible)
How each component works
Notice-period buyout
If you can't serve the full notice, you (or your new employer) pay the company for the unserved days. Most contracts use Basic + DA × unserved days / 30. A few use gross salary — check your offer letter. The amount is treated as a normal salary deduction; your tax actually goes down because your taxable salary for the year drops by this amount.
Leave encashment
Unused privilege / earned leaves get paid out at (monthly basic + DA / 26) × leave days in most companies. Tax treatment: tax-free up to the lower of (a) actual amount, (b) average salary for last 10 months × (leave entitled), (c) ₹25 lakh aggregate lifetime cap (raised from ₹3L in 2023). Government employees: fully exempt.
Gratuity
Payable after 5 continuous years (or 4 years + 240 days). Formula: (last drawn Basic + DA) × 15 × years of service / 26 for companies covered under the Gratuity Act. Tax-free up to ₹20 lakh in aggregate across employers.
Pending salary & bonus
Days worked in your last month + any unpaid variable / bonus. Fully taxable as salary in the year received. Form 16 from the company will reflect these.
FAQ
Can I refuse to pay the notice-period buyout?
Legally murky. Your employment contract typically allows the company to recover the buyout; refusing risks getting a relieving letter withheld, which can block your next onboarding. Negotiation: ask the new employer to "buy your notice" — many do for senior hires. If you do pay, ensure it's deducted gross from your final salary so you get a tax benefit.
Is the new employer's notice-buyout reimbursement taxable?
Yes — it's perquisite income from your new employer. They'll add it to your CTC and deduct TDS. Net-net you may be slightly worse off than serving the notice, depending on your slab. Use our Income Tax Calculator to model the difference.
My company says gratuity is "non-taxable" — is it always?
Not always. The ₹20 lakh exemption is a lifetime aggregate across all employers. If you previously received ₹15L gratuity from another job, only ₹5L of this gratuity is exempt. The rest is taxed at slab.
When does FNF get paid?
Most Indian companies process within 30-45 days of last working day. The Maharashtra Shops & Establishment Act (and similar in other states) requires payment within 2 working days for resignations, but in practice 30-45 days is the norm. If FNF is delayed beyond 60 days, escalate to the labour commissioner.
Need a resignation letter?
Use our Resignation Letter Generator — it's pre-formatted to mention FNF, relieving letter, and PF transfer.