Formula:
The HRA exemption you can claim is the least of the following three amounts:
- Actual HRA received from your employer.
- Actual rent paid by you minus 10% of your (Basic Salary + Dearness Allowance).
- 50% of your (Basic Salary + Dearness Allowance) if you live in a Metro city (Delhi, Mumbai, Kolkata, Chennai).
- 40% of your (Basic Salary + Dearness Allowance) if you live in a Non-Metro city.
Where:
- Basic Salary: Your basic pay component.
- Dearness Allowance (DA): DA forming part of salary for retirement benefits (if applicable).
- HRA Received: The House Rent Allowance component provided by your employer.
- Rent Paid: The actual rent you pay for your accommodation.
- Metro City: Delhi, Mumbai, Kolkata, Chennai.
- Non-Metro City: Any city other than the specified metro cities.