What is Salary ?

Any amount received by the taxpayer from employment is taxable as Salary.

Salary includes:

1. Salary and wages
   
2. Allowances
3. Non-Monetary Benefits
4. Gifts from Employer valued more than Rs
5. Pension
6. The taxable portion of Gratuity
7. Leave Encashment
8. Advance/Arrears of Salary
9. Bonus/Incentive received
10. Any other amount received from Employer

A taxpayer is allowed to reduce amounts of allowances that are exempt. You can check details about exempt allowance here.

Also, Profession Tax paid (generally paid by Employer by deducting from salary) and Standard deduction of Rs.50,000/- is allowed as a deduction from Salary.