When you are calculating your Income Tax, below three different formulas are considered.
You are eligible to get the minimum amount from all three, as deduction.
a. The actual rent allowance the employer provides you as part of your salary,
b. the actual rent you pay for your house from which 10% of your basic pay is deducted,
c. 50% of your basic salary when you reside in a metro or 40% if you reside in a non-metro.
The least value of these three values is allowed as tax exemption on your HRA. You can discuss restructuring your pay structure with your employer in order to avail the most of your HRA tax benefit.