Income Tax for Salary? and What's the difference between monthly CTC and Take Home

Look into this
1) Salary is broken up into several components, like basic, HRA, special allowance etc. The main reason for doing this is to make your salary tax effective; to ensure that you pay minimum tax on your salary. Here is a run down on the various common components and they are treated according to the tax laws.
Income tax laws attach a certain value to each of these components:
• Residential accommodation
• Use of car
• Services such as that of a gardener, watchman, sweeper or any personal attendant
• Provisions such as gas, electricity or water that is paid by the company
• Any free education or concessional education that the company pays you or your family
• Interest free loans
• Reimbursement of holiday related travel or accommodation expenses
• Festival gifts or vouchers
• Individual club membership
http://wealth.moneycontrol.com/yourstartupkit/income-tax/how-do-taxes-affect-my-salary-/9671/0

2) Understand above theory by an example by this article
http://wealth.moneycontrol.com/features/income-tax/all-you-wanted-to-know-about-ctc-/12042/0 

Particulars	Rs (per annum)	Income Tax Laws	Taxable Rs
Basic	480,000	Fully Taxable	480,000
Dearness Allowance	48,000	This is an allowance given to you to compensate for inflation or rising prices. DA is Fully Taxable.	48,000
Entertainment Allowance	12,000	The taxability of entertainment allowance depends on the company policy. In this case, this is Fully Taxable. However, in some companies, entertainment allowances become tax free if bills are submitted to the extent that these expenses were used towards office purposes.	12,000
House Rent Allowance	96,000	House Rent Allowance (HRA) exemption is applicable only if you are living in a rented house and not in your own house. There are certain conditions just to ensure that you do not claim a higher rent reimbursement, to get a greater tax benefit. The minimum of the three amounts will be exempt from tax: a. Actual HRA allowance in the salary package, that is Rs 96,000 OR b. HRA received less 10 per cent of salary and DA(480,000 + 48,000), that is (96,000 – 10% of 528,000) = 43,200 OR c. If you live in metropolitan (Delhi, Chennai, Bombay and Calcutta), 50 per cent of salary and DA However, if you live in any other city, it is 40 per cent of salary + DA. So, it would be Rs 211,200 (40% of 528,000) The least amount of the three would be Rs 43,200, which is exempt. That means the actual taxable amount would be Rs 96,000 - Rs 43,200 = Rs 52,800	52,800
Conveyance Allowance	12,000	You get this allowance to meet your traveling expenses from home to work. An amount of up to Rs 800 per month is exempt from tax. If your employer pays you a monthly conveyance allowance of more than Rs 800, then you will have to submit proofs such as fuel and petrol bills for that excess amount to claim tax exemption. In this case, Conveyance allowance of Rs 9,600 per annum is exempted from tax. So, Rs 2,400 will be subjected to tax. In some companies, if the balance is used for official purposes, the amount becomes tax free.	2,400
Overtime Allowance	12,000	OA is Fully Taxable.	12,000
Medical reimbursement	15,000	Your company will reimburse the expenditure that you incur on medical expenses for you and your family. This is however restricted to Rs 15,000 per annum. So, In this case, produce medical bills for a maximum of Rs 15,000 to her employer. If you are allotted a annual medical reimbursement of Rs 20,000, Rs 15,000 would be tax exempt if you submit bills, which means you’d have to pay tax on the remaining amount of Rs 5,000.	0
Gross Salary	675,000	Gross Taxable Salary	607,200
Company’s contribution to provident fund (@ 12% of Basic Salary)	57,600	Tax Income Tax For women: Up to 0 to Rs 1.8 lakh: Free            From Rs 1.8 lakh to Rs 3 lakh: 10 per From Rs 3 lakh to Rs 5 lakh: 20 per Above Rs. 5 lakh: 30 per Education cess is applicable @ 3 per cent on income tax.	(300,000-180,000)*0.10 + (500,000-300,000)*0.20 + (607,200-500,000)*0.30 = 84160 (Income Tax) 84160+84160*0.03 =     86,685(-)
Annual CTC	732,600	Net annual salary	520,515
Monthly CTC	61,050	Net monthly salary	43,376
		Myself Contribution to Provident Fund	4,800(-)
		Professional Tax	200(-)
		Monthly Take Home	38,376

So while Monthly CTC was Rs 61,050, her take home is just Rs 38,376

How can increase her take home?
If she invests Rs 1 lakh (the limit under section 80 C) in tax saving instruments like PPF, ELSS etc, her annual tax comes down to Rs 55,785.

Gross taxable salary	607,200
PPF(Investment)	100,000
Gross taxable salary	507,200
Tax	55,785 (-)
Net annual salary	551,415
Net monthly salary	45,951
(Less) Pf contribution	4,800 (-)
(Less) Professional tax	200 (-)
Monthly take home	40,951

It is also important that while she changes jobs, she should take some time to understand the package offered to her to ensure that the CTC is friendly and ensures maximum take home.

3) the Impact of Inflation and Taxes
http://wealth.moneycontrol.com/yourstartupkit/financial-planning/impact-of-inflation-/14772/0 

Whenever you consider an investment option, remember to evaluate the expected rate of return in real terms. In other words, deduct your expected compound annual rate of inflation for the investment period from the compound annual rate of return that you expect from your investment.

For example, say you are considering a bank fixed deposit that promises you an 11% annual rate of return over the next five years and your expectation of inflation during this period is 7% (compound annual).

For this investment, your real compound annual rate of return is only 4%. If your income from this investment attracts a 30% tax rate, then your post-tax real rate of return diminishes further to 0.7% only!  

PPF: http://www.moneycontrol.com/news/tax/ppf-astax-saverinvestment-option_567272.html
http://www.moneycontrol.com/news/economy/ppf-rate-may-risedo-we-have-money-to-save_556031.html