HRA = Basic Salary × HRA percentage
HRA exemption under Indian tax rules = least of:
Actual HRA received
Rent paid minus 10% of basic salary
50% of basic salary if living in a metro city
40% of basic salary if living in a non-metro city
Taxable HRA = Actual HRA received – HRA exemption
If rent paid is less than or equal to 10% of basic salary, HRA exemption may be nil
Use dearness allowance only if it forms part of retirement benefits
For salaried employees, calculate HRA separately for each month if salary or rent changes
Keep rent receipts and landlord details for claim support