Dear Sudhanshu,
Fahim has put up everything so very well, if you are still having those questions that you have put up, you need to take a book on taxation, it shall definitely contain a chapter on salary, the biggest chapter of a taxation book. You must get it and read it. Those who have read the primary things, would also have doubts, I understand, but after the explaination Fahim has given, one will hardly have any doubts. So, please read for understanding the important things, that are to be kept in mind while making salary. Without that, you will not be able to understand however well anyone explains.
He and even others have given very good explainations. That is all you need to know to process salary.
Regards.