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How to Save Tax for Salary Above 30 Lakhs?

Updated on :  

08 min read.

High-income individuals, especially those who belong to the above 30 lakh tax slab, have to bear a heavy tax burden. However, there are various ways in which the tax liability can be reduced to some extent. 

So, if you earn Rs 30 lakh yearly and are looking for ways how to save tax for salary above 30 lakhs, give this article a read. It covers all the ways in which you can save taxes by availing the deductions available under various sections of the IT Act. 

Income tax slabs under old income tax regime vs new income tax regime:

The tax slabs under the new vs old tax regime are:

Annual IncomeOld Tax RegimeNew Tax Regime
Up to Rs 2.5 lakhsNilNil
>2.5 lakhs – Rs 5 lakhs5% (however full rebate)5%
>5 lakhs – Rs 7.5 lakhs20% + Rs  12,50010% + Rs 12,500
>7.5 lakhs – Rs 10 lakhs20% + Rs  12,50015% + Rs 37,500
>10 lakhs – Rs 12.5 lakhs30% + Rs 1,12,50020% + Rs 75,000
>12.5 lakhs – Rs 15 lakhs30% + Rs 1,12,50025% + Rs 1,25,000
>15 lakhs and above30% + Rs 1,12,50030% + Rs 1,87,500

To calculate your tax liability in both the regimes, you can use old vs new tax regime calculator. 

Please note that you will not receive any deductions under the new regime. The tax benefits you will read in this article will only be applicable if you file using the old one.  

Ways to save tax on 30 lakhs salary

When you are tax planning for salary above 30 lakhs, you need to know the following: 

  • Salary (-) Exemptions = Taxable Salary Income
  • Taxable Salary Income (-) Deductions = Net taxable income. 

Therefore, you can maximise tax savings through the following exemptions and deductions:

Part 1- Exemptions

You can find out your salary structure from the CTC. It generally looks like this:

Salary ComponentTaxability
Basic Fully-taxable
Dearness Allowance Fully-taxable
House Rent Allowance (HRA)Exempt up to a certain limit. Calculate now
Leave Travel Allowance (LTA)Actual travel ticket expenses exempt for 2 trips in 4 years under 10(5). Read more
Mobile/ Internet reimbursement Exempt if:
– used predominantly for office purposes – proofs/bills submitted
Children Education and Hostel allowanceRs  4800 per child (max 2 children)
FoodRs  50 per meal (max 2 meals a day)Annual= Rs  31,200 (50*2*26 days*12 months)
Standard DeductionRs 50,000 (Will be given to all without any restrictions)
Professional TaxGenerally Rs 2,400 (Varies from state to state)

Part 2- Deductions

When you are tax planning for salary above 30 lakhs, you can get deductions on the following:

Paying
health
insurance
policy
premium
(Section 80D)
Self, your spouse, and your dependent children:
Rs 25,000 (Rs 50,000 if aged 60 and above)
Parents: Rs 25,000 (Rs 50,000 if aged 60 and above)
Opting for an
education
loan (Section 80E)
Interest deduction for 8 years from the year of repayment of loan taken for the higher education of yourself, your spouse, dependent children, or a student of whom you are
the legal guardian
Donating
to charity (Section 80G)
50% or 100% of the eligible amount
Investing
in tax
saving
instruments
(Section 80C)
Tax benefit of Rs.1,50,000 per year. You can invest in the
following options:
Employees’ Provident Fund (EPF)
Public Provident Fund (PPF)
Equity Linked Saving Scheme funds (ELSS)
– Home loan repayment and Stamp duty
Sukanya Smriddhi Yojana (SSY)
National Savings Certificate (NSC)
– Fixed Deposit for 5 years, and more
Costs to
treat
disabled dependents (Section 80DD)
If you have disabled dependents for whom you bear
medical expenses, you are eligible for the tax relief: 
– 40% disability: Rs.75,000
– 80% disability: Rs.1,25,000
Deductions
on home
loan
payments
Principal amount: Upto Rs 1.5 lakhs u/s 80C
Interest amount: Upto Rs 2 lakhs paid u/s 24b  
Maturity
amount of a Life
Insurance
Policy
Maturity proceeds are tax exempt if the sum assured is ≤:
– 20%: policies issued before 1 April 2012
– 10%: policies issued after 1 April 2012
– 15%: policies issued after 1 April 2013 for a person with disability or disease.

How much tax will be deducted for 30 lakhs yearly income? Tax calculation example

Let’s take an example for better understanding: 

Gross Salary30,00,000
Less:
HRA(1,60,000)
LTA(55,000)
Reimbursements(35,000)
Children education and hostel allowance(11,000)
Standard Deduction(50,000)
Professional Tax(2400)
Taxable Salary Income26,86,600
Less: Deductions
80C (Refer Note below)(1,50,000)
80D(50,000)
80E(25,000)
Net Taxable Income24,61,600
Tax on the above income5,50,980
Rebate u/s 87ANA
Total Tax5,50,980 + 4% cess

Additionally, if you are eligible, you may claim these deductions:

Interest on home loan deduction u/s 24b(2,00,000)
Home loan 80EEA(1,50,000)
Investments in National Pension Scheme (NPS) u/s 80CCD(1B)( 50,000)

Note: You might not always have a home loan or be interested in the investment plans listed under Section 80C. However, you may consider these investments to make use of the entire Rs 1.5 lakh limit under 80C:  

  1. ELSS mutual funds- Rs 60,000 (Investment: Rs 500 per month SIP, Returns- 12% CAGR, Lock-in-period: 3 years)
  2. Children’s Education fees: (Rs 25,000 to Rs 1 lakh) 
  3. EPF: Around Rs 30,000 – Rs 72,000, i.e., 12% of your basic + DA (contribution already made by your employer)
  4. Term plan insurance- Rs 12,000 premium (Around Rs 1 Crore cover)
  5. ULIP or endowment plant- Rs 12,000 premium

If you file your taxes according to the new regime, your tax liability will be Rs 4,75,980 + 4% cess. 

Availing tax deductions are a great way to reduce your taxable income legally. However, there are various conditions that one needs to meet before being eligible to claim a deduction. So, before claiming tax benefits, make sure you are eligible for them.

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How To Save Tax For Salary Above 20 Lakhs?
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