Can my employer refuse to let me buy out the notice?

Yes, if the contract gives them that discretion, and many do. Buyout is often described as subject to management approval rather than as a right. In practice most employers accept the money.

Do I pay GST on my own buyout?

If your employer charges it, the amount lands on your recovery and comes out of your settlement. You cannot claim it back, because you are not a registered business receiving a supply for your own use.

Is notice pay recovery taxable for me?

The recovery reduces the salary you actually receive, but employers often still show the full salary in Form 16. Whether you can reduce your taxable salary by the recovery has gone both ways at tribunal. Keep the settlement statement.

Notice period buyout calculator

If your new job cannot wait for a ninety-day notice, you can usually pay your way out of the remainder. The amount is set by your contract, and it is almost always calculated on basic pay rather than gross.

The part that surprises people is GST. Tax authorities have treated notice pay recovery as a service the employer supplies, and many employers now add 18% on top. It is contested, but if your employer charges it, you pay it.

Total buyout cost

₹1,41,600

60 days short of the required notice

Notice required: 90 days
Notice served: 30 days
Shortfall: 60 days
Daily rate: ₹2,000
Recovery amount: ₹1,20,000
GST at 18%: ₹21,600
Total payable: ₹1,41,600

Everything above is worked out in your browser. Nothing you type is sent to us or saved anywhere.

How this is worked out

The shortfall is the required notice minus the days you will serve.
The daily rate is your monthly recovery pay divided by thirty.
The recovery is the daily rate multiplied by the shortfall days.
GST of 18% is applied on the recovery amount when your employer charges it.

What this does not cover

Many new employers will reimburse a buyout as part of the offer. Ask before you pay it yourself.
Whether GST is legally due on notice pay recovery has been decided both ways in different rulings. Employers charge it to be safe.
The recovery is usually netted off your full and final settlement rather than paid separately.
Some contracts calculate on gross salary. That can nearly double the figure, so read the clause rather than assuming.

Questions people ask

Can my employer refuse to let me buy out the notice?: Yes, if the contract gives them that discretion, and many do. Buyout is often described as subject to management approval rather than as a right. In practice most employers accept the money.
Do I pay GST on my own buyout?: If your employer charges it, the amount lands on your recovery and comes out of your settlement. You cannot claim it back, because you are not a registered business receiving a supply for your own use.
Is notice pay recovery taxable for me?: The recovery reduces the salary you actually receive, but employers often still show the full salary in Form 16. Whether you can reduce your taxable salary by the recovery has gone both ways at tribunal. Keep the settlement statement.

Where these figures come from

Rates and rules on this page were last checked against the source on 31 August 2026. Tax law changes; check the source before you rely on a number for a decision.

Related calculators

Running these numbers because you are weighing a move? See what is open right now.