What does salary in India include?

Section 17 of the Income Tax Act defines salary to include:

• Wages
• Pensions or Annuities
• Gratuities
• Advance of Salary
• Any fee, commission, perquisites (the value of rent-free accommodation provided by the employer or the value of any concession in the matter of rent) or profits in lieu of or in addition to salary or wages
• Any encashment of leave salary
• Any amount of credit to provident fund of employee to the extent it is taxable

Salary also generally includes what is known as a “dearness allowance.” A dearness allowance is a type of allowance provided for the higher-cost of living in particular cities or states. While this allowance is most important for government employees, certain private companies also offer it at their own discretion.