How to use HRA to save Tax

HRA stands for House Rent Allowance. It is taxable under the IT Act subject to specified exemption limits. If you do one of the following then your HRA is fully taxable, not exempt:
Reside in your own house; or Do not pay rent for house occupied by you.
However if you are living in a rented house and you are the one paying the rent, then HRA exemption can be availed for the period during which you occupy the rented house during the relevant tax year. Also, to claim the exemption, your employer is required to obtain appropriate and adequate proof of payment of rent for the entire period for which you want to claim exemption. An exception to the 'proof required' rule is that if you are a salaried employee drawing HRA up to Rs. 3,000 per month, you do not have to provide a rent receipt to your employer.Exemption amount is calculated as follows:
In Metro cities:
The least of Actual HRA / Rent in excess of 10% of salary / 50% of salary
In other cities:
The least of Actual HRA / Rent in excess of 10% of salary / 40% of salary

'Salary' for purposes of HRA includes dearness allowance if you're getting it, but excludes all other allowances and perquisites.
More understanding :-
Can I claim HRA if I live in a house that I own? No.
Can I claim HRA if I'm not currently paying any rent? No.
Can I claim both HRA and take home loan deduction benefit to save tax? Yes, as far as the IT Act is concerned – the two sections on HRA and Rental Income are completely separate, so you can avail HRA deduction and also home loan tax benefits. For example:Suppose you are renting a house close to where you work, but your home is elsewhere, and you are repaying a home loan on your home property. In this case you can avail your HRA deduction, as well as take the tax benefit of the home loan. The two sections (dealing with HRA and Home Loan benefit) are completely separate in the IT Act.