Formula for calculating gratuity:
Last drawn salary (basic salary plus dearness allowance) multiplied by number of completed years of service multiplied by 15/26
For example: your basic salary plus dearness allowance is Rs. 25000 and you have been working with your company for 5 years 3 months then your gratuity will be calculated as
25000 X 5 X 15/26
In case if you were working for 5 years 7 months, then it would have been calculated as:
25000 x 6 x 15/26
Period over six months is equivalent to 1 year.
Please note that gratuity is given only when an employee has completed 5 years or more in an organization.