India Severance
& Tax Calculator FY 2025-26
Get an instant, legally-accurate breakdown of your severance pay, gratuity entitlements, and after-tax take-home for the current financial year.
Employment Core
Severance Package
Voluntary Retirement (VRS)
Unlocks ₹5L Exemption
Tax Planning
Accuracy First
This calculator implements the Payment of Gratuity Act 1972, ID Act 1947, and Income Tax Act 1961 (FY 2025-26).
₹26.39 L
This is your final in-hand cash after all statutory compliances and FY 2025-26 tax deductions.
Total Gross
₹27.40 L
Estimated Tax3.7% Rate
₹1.01 L
Survival Runway EstimateInsight
Your net take-home provides a cash buffer equivalent to 13.4 months of your current gross salary.
Package Composition
🏦Tax Computation Waterfall
Slab Breakdown
Statutory & Legal Analysis
COMPLIANCE CHECK| Component | Amount Offered | Statutory Min. | Tax Exemption |
|---|---|---|---|
Gratuity Sec 10(10) | ₹3,11,538 | ₹3,11,538 | Tax-free: ₹3,11,538 |
Leave Encashment Sec 10(10AA) | ₹1,03,846 | - | Tax-free: ₹1,03,846 |
Ex-Gratia Severance Contractual Component | ₹4,50,000 | - | Fully Taxable |
Notice Pay Contractual Component | ₹1,50,000 | - | Fully Taxable |
Bonus & Arrears Contractual Component | ₹50,000 | - | Fully Taxable |
EPF Withdrawal Sec 10(11)/(12) | ₹8,00,000 | - | Tax-free: ₹8,00,000 |
ESOP Vesting Sec 17(2) | ₹2,50,000 | - | Fully Taxable |
Clarity in the Noise
Looking at a severance package can feel incredibly overwhelming—whether you're proactively mapping out your career runway, or you've just been impacted by an unexpected layoff. We've broken down the most common grey areas below. No heavy legal jargon, just straight answers so you can figure out exactly where you stand and focus on your next chapter with confidence.
I received an "Ex-Gratia" severance amount. Do I have to pay tax on it?
Unfortunately, yes. While it feels like compensation for job loss, the Income Tax Department treats generic "severance pay," notice pay, or ex-gratia as regular salary. It will be taxed exactly like your normal monthly paycheck at your slab rates.
Is my Gratuity completely tax-free?
For most of us in the private sector, gratuity is tax-exempt—but only up to the exact statutory formula limit (15 days' wage for every year worked), capped at ₹20 lakh. If your employer gives you anything extra outside that formula, the extra amount becomes taxable.
I worked for 4 years and 8 months. Can they deny my Gratuity?
It's absolutely worth pushing back. Several High Court rulings have stated that completing 4 years and 240 days of continuous service qualifies you for Gratuity. If you meet this mark, don't hesitate to formally request it from HR.
What is the "5-year rule" for my PF withdrawal?
If you withdraw your EPF after 5 years of continuous service (this includes service across multiple employers if you transferred your PF account), the entire withdrawal is tax-free. If it's been less than 5 years, the employer's contribution and earned interest will be taxed.
Will I get the new 87A tax rebate on my severance?
Under the proposed FY 2025-26 New Regime, if your total taxable income (including your severance) stays below ₹12 lakh for the financial year, your final tax drops to zero. But keep in mind, if your severance pushes you even slightly above that total threshold, the standard slab rates will apply.
How does a mid-year transition affect my taxes when I find a new role?
When you join your next company, make sure to submit Form 12B to declare your old salary and this severance package. It feels like extra paperwork, but it allows your new employer to correctly deduct TDS and saves you from a massive tax bill surprise at the end of the year.