The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps the employee in saving tax. As per the Income Tax Rules / Provisions the HRA received is fully taxable if an employee is living in his own house or if he does not pay any rent.
Exemption in respect of House Rent Allowance (HRA) is available to employees for the period during which rental accommodations is occupied by the employee. An employee can save upto 50% of salary if resides in Metro (40% of salary if resides in non-metro).As per Income Tax Act Section 10 (13A) and rule 2A exemption in respect of house rent allowance is least of the following:-
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