Many candidates cannot handle this question correctly. In first attempt one should avoid answering this question directly by quoting a number like I am expecting $150,000 for this position.
One has to let the HR person come up with a number. If the HR person insists then HR person will ask you your current salary and try to top it up with a percentage. At this point you have to give a number that is your gross current salary. Do not just give base salary.
Sample answer is:
I have 7 years of experience in Java technology. I would expect your organization to compensate my with the market rate for this position.
My current gross salary is $135000, out which I get 401K match and free medical insurance from my current company. I also get 12% bonus every year.Read the full book at www.amazon.com