sec 10(10C)

As per the guidelines provided by Income Tax Department on section 10(10C) - retrenchment compensation, it has been explained that in this rule, the expression “salary” shall have the same meaning as is assigned to it in clause (h) of rule 2 of Part A of the Fourth Schedule.

As per the aforementioned rule, Salary includes Basic pay and Dearness Allowance but excludes all other allowances and perquisites.

Links:

To the Guidelines on section 10(10C): https://www.incometaxindia.gov.in/Rules/Income-Tax%20Rules/103120000000006947.htm

To the Fourth Schedule: https://www.incometaxindia.gov.in/Acts/Income-tax%20Act,%201961/1968/102120000002035558.htm