HRA = Basic Salary × HRA percentage
HRA exemption under income tax = Minimum of:
Actual HRA received
50% of basic salary if living in a metro city
40% of basic salary if living in a non-metro city
Rent paid minus 10% of basic salary
Taxable HRA = Actual HRA received – HRA exemption
If rent paid is less than or equal to 10% of basic salary, HRA exemption may be lower or nil
If no rent is paid, HRA exemption is generally not available
Metro cities for HRA calculation are Delhi, Mumbai, Kolkata, and Chennai