Full and Final Settlement Calculator
An estimate of what your employer pays when you leave: last month’s salary, leave encashment and gratuity, less notice not served.
Before income tax. Your employer’s policy decides the final figure.
The settlement, line by line
| Salary for the days worked₹1,00,000 ÷ 30 × 15 days | ₹50,000 |
| Leave encashment₹40,000 ÷ 26 × 20 days | ₹30,769 |
| Gratuity(15 ÷ 26) × ₹40,000 × 5 years | ₹1,15,385 |
| Total before tax | ₹1,96,154 |
Tax and timing
- Gratuity is tax-free up to ₹20 lakh, counted across your whole career, for private-sector employees.
- Leave encashment when you leave is tax-free up to ₹25 lakh across your career for private-sector employees; above that it is taxed as salary.
- The last month’s salary, notice pay and any bonus are taxed as salary, and your employer deducts TDS on them.
- The Code on Wages asks employers to pay wages due within two working days of your leaving; gratuity is due within 30 days. Many companies take longer — your policy and your exit letter say when.
How it’s worked out
What goes into a full and final settlement
When you leave a job your employer settles everything it owes you, less anything you owe it. The usual parts are your salary for the days worked in the last month, encashment of unused earned leave, gratuity if you have served long enough, and any bonus still due. Notice you did not serve and advances or loans from the company come off.
On a monthly gross of ₹1,00,000 and basic plus DA of ₹40,000, with 15 days worked in the last month, 20 days of unused leave and 5 years 3 months of service, this comes to ₹50,000 of salary, ₹30,769 of leave encashment and ₹1,15,385 of gratuity: ₹1,96,154 before tax.
Leave encashment and notice: your company’s rules decide
Leave encashment is usually worked out per day as basic plus DA divided by 26 working days, though some companies divide by 30. How many days can be encashed, and whether all leave types count, is set by your HR policy. Choose the divisor your appointment letter or policy uses.
If you leave without serving your full notice, many employers recover pay for the days short. This tool works that out as gross salary divided by 30 for each day not served. Some employers recover on basic instead, and some waive it, so check your exit terms.
Gratuity, tax and timing
Gratuity is (15 ÷ 26) × last-drawn wages × completed years, after five years of continuous service for a permanent employee or one year for a fixed-term employee, under the Code on Social Security, 2020. It is the same calculation as the gratuity calculator, capped at ₹20 lakh.
For private-sector employees, gratuity is tax-free up to ₹20 lakh and leave encashment on leaving up to ₹25 lakh, both counted across your whole career. The last month’s salary, notice pay and bonus are taxed as salary. The Code on Wages asks employers to pay wages due within two working days of your leaving, and gratuity is due within 30 days.
Questions people ask
How is full and final settlement calculated?
Add your salary for the days worked in the last month, encashment of unused earned leave, gratuity if eligible and any bonus due, then subtract pay for notice not served and other recoveries such as advances. This tool shows each line before tax.
How is leave encashment calculated on resignation?
Usually unused earned leave days × (basic + DA) ÷ 26, though some companies divide by 30. Your HR policy sets the divisor and how many days can be encashed. On ₹40,000 basic, 20 days at ÷26 comes to ₹30,769.
Do I get gratuity if I resign before five years?
A permanent employee generally needs five years of continuous service; below that it is nil. A fixed-term employee becomes eligible after one year under the contract. The waiting period does not apply on death or disablement.
How much is deducted for notice not served?
Commonly gross monthly salary ÷ 30 for each day short of the notice period, though some employers use basic or waive it. Your appointment letter and exit terms decide. This tool uses gross ÷ 30.
Is full and final settlement taxable?
Partly. For private-sector employees gratuity is tax-free up to ₹20 lakh and leave encashment on leaving up to ₹25 lakh, across your career. Salary for the last month, notice pay and bonus are taxed as salary, with TDS deducted.
How long does full and final settlement take?
The Code on Wages asks employers to pay wages due within two working days of an employee leaving, and gratuity is due within 30 days. In practice many companies take 30 to 60 days; your exit letter should give the date.
Educational estimates from the figures you enter. Not investment advice — Muktify is not SEBI-registered.