The there thread was started in 2011 and it is good that it is still alive.....
HRA is a component of salary. It is included in the salary to make the employee eligible to get some tax benefits. (The basic idea now a days is not tax benefits but to reduce the burden of the employers from certain statutory contributions like, PF, Gratuity, Bonus etc..! That is why they are paying HRA without any reference to the where the employee stays, whether in rented house or owned house and whether the spouse is getting HRA or not etc etc)
To be legally correct, the HRA should be based on Salary. Here the salary should be gross salary and not merely basic salary. HRA should not be at the same percentage for all the employees. It shall depend upon the city of residence. As stated above, it should be paid only to those who resides in rented house. There are some conditions like you can stay with your parents and pay rent to parents but you can not claim rent for staying in a house owned by your spouse or rented out by the spouse. Income Tax exemption is based on three parameters and shall be the least of the following:
(1)The actual rent that is paid should be less than 10% of the basic salary (Basic salary shall include dearness allowances, other allowances including commission based on sales)
(2) In case you’re staying in a metro, 50% of the basic salary and 40% if you live in a a non-metro city.
(3) The actual amount received as the HRA from the employer.
The above being HRA exemption factors, will not influence your salary structuring. In salary structuring, therefore, a common understanding is available and that is a certain percentage of the your basic salary. Still, when you pay it across all the employees, the objective of paying HRA will be defeated. It is seen that even in the case of employees whose salary will not come under IT brackets are paid huge amount as HRA just to reduce the employer's contribution to PF or gratuity. This may have a negative effect in future if any one objects to it. Therefore, it is advisable to pay HRA only to those who actually resides in rented houses. Then it will become an allowances out of the purview of salary.