Exit Policy - Employee Notice Period

what is the policy for an employee who wants to buyout the notice period instead of serving it. Should he/she be paying the gross or basic if the notice period is 1 month?

Should be Basic only, as allowances are not given/considered for the said period. If you give DA, then it should be also considered.
But many companies ask for Net salary (After deduction of taxes, as tax is not applicable on the income not made!).
Also, any other subsidies/deductions should not be considered in the amount.
What is the 'exact' wording written in the employment agreement (Appointment letter)?
Best Regards,
Amod.

A notice period buyout should always be on gross basis. If the employee had worked, you would have to pay the full amount. Therefore, for settling the notice period, gross amount should be taken.
Also check the standing orders (if applicable) and the appointment letter to see if anything is specified for this purpose.