Any amount received by the taxpayer from employment is taxable as Salary.
Salary includes :
- Salary and wages
- Non Monetary Benefits
- Gifts from Employer valued more than Rs
- Taxable portion of Gratuity
- Leave En-cashment
- Advance/Arrears of Salary
- Bonus/Incentive received
- Any other amount received from Employer
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) is allowed as deduction from Salary.