We know HRA (House Rent Allowance) is a salary component. How is HRA Calculated?
If you are asking specifically on how much HRA can be paid to an employee, then the computation is very simple. Ascertain if the employee is staying in a rented house in any of these four metro cities, i.e. Delhi, Mumbai, Kolkata or Chennai. If yes, then the employee can avail HRA of 50% of basic salary. For any other cities or towns, the HRA is at 40% of basic salary.
Trust this helps.
Thank you Vinod @vgulvady !