The exempted amount is least of
1. Actual HRA
2. 50 % of Basic in Metro
3. Difference of Actual Rent Paid and 10% of basic
One of the example has been worked to help you understand how much HRA is tax exempt.
Case example
In Hyderabad you are paying 25000 rent and basic 160000
Your exemption would be 25000-16000 (10% basic)= 9000 per month
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Please note that metro cities and non metro cities have a different mode of calculation for the HRA.
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