Filing for AY 2024-25 is coming soon

Keep calm and sign up for early access to our super filing platform

AI Summary to Minimize your effort

Index

How To Save Tax For Salary Above 30 Lakhs?

By Ektha Surana

Updated on: Apr 5th, 2024

31 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 a salary above 30 lakhs, give this article a read. It covers everything how you can save taxes by availing the deductions available under various sections of the Income-tax Act, 1961.

Income Tax Slabs Under Old Income Tax Regime vs New Income Tax Regime:

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

Tax Slab	FY 2023-24 Tax Rate (Old tax regime)	Tax Slab	FY 2023-24 Tax Rate (New tax regime)
Up to Rs 2,50,000	Nil	Up to Rs 3,00,000	Nil
Rs 2,50,000 – Rs 5,00,000	5%	Rs 3,00,000 – Rs 6,00,000	5%
Rs 5,00,000 – Rs 10,00,000	20%	Rs 6,00,000 – Rs 9,00,000	10%
Rs 10,00,000 and beyond	30%	Rs 9,00,000 – Rs 12,00,000	15%
NA	NA	Rs 12,00,000 – Rs 15,00,000	20%
NA	NA	Rs 15,00,000 and beyond	30%

Note: The tax slabs under the new regime have been revised in Budget 2023, there have been no changes made in budget 2024.

To calculate your tax liability in both 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 under the old regime.

Ways to Save Tax on 30 Lakhs Salary

When you are tax planning for a 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 maximize 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 Component	Taxability
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 are 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's Education and Hostel Allowance	Rs 4800 per child (max 2 children)
Food	Rs 50 per meal (max 2 meals a day)Annual= Rs 31,200 (50226 days*12 months)
Standard Deduction	Rs 50,000 (Will be given to all without any restrictions)
Professional Tax	Generally Rs 2,400 (Varies from state to state)

Part 2- Deductions

When you are tax planning for a 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 – severe or 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
The 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.
Standard Deduction	Rs 50,000 (Will be given to all without any restrictions)

Example of Calculation of Tax Under New and Old Tax Regimes

Let’s take an example for better understanding:

Example: Mr A has a Salary income of Rs. 30 lakhs. He is also claiming the following deduction and exemption. Calculate tax liability under the Old Tax Regime and New Tax Regime

HRA exemption = Rs 1,60,000
LTA exemption = Rs. 55,000
Children's Education and Hostel Allowance =Rs. 9,600
Profession Tax = Rs. 2,400
Investment in PPF, ELSS = Rs. 1,50,000
Medical insurance premium towards Parents = Rs. 50,000
Interest on education loan = Rs. 25,000

Particular	Old tax regime	New tax regime
Gross Salary u/s 17(1)	30,00,000	30,00,000
Less: Exemption u/s 10
HRA Exemption	1,60,000	❌
LTA Exemption	55,000	❌
Reimbursement	0	❌
Children's education and hostel allowance	9,600	❌
Less: Deduction u/s 16
Standard deduction	50,000	50,000
Profession Tax	2,400	❌
Income under the Head Salary	27,23,000	29,50,000
Less: Deduction under Chapter VI-A
Section 80C	1,50,000	❌
Section 80D	50,000	❌
Section 80E	25,000	❌
Net Total Income	24,98,000	29,50,000
Income Tax	5,84,376	6,08,400
Less: Rebate u/s 87A	0	0
Tax Liability (Including Cess)	5,84,376	6,08,400

As per the above computation the Old Tax Regime is more beneficial by Rs. 24,024. This is because of the claim of deduction and exemption under the Old Tax Regime, which is not available in the New Tax Regime.

Note: In the case of the Old Tax Regime, 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:

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

Related Articles:

How To Save Tax For Salary Above 7 Lakhs?

How To Save Tax For Salary Above 10 Lakhs?

How To Save Tax For Salary Above 12 Lakhs?

How To Save Tax For Salary Above 15 lakhs?

How To Save Tax For Salary Above 20 Lakhs?

How To Save Tax For Salary Above 50 Lakhs?

How to Save Tax For Salary Above 1 crore?

Frequently Asked Questions

How to claim a tax rebate under section 87A?

While filing your income tax return, if your taxable income is less than Rs.5,00,000 after incorporating all the applicable deductions and exemptions, you can receive a tax rebate of up to Rs.12,500 under the old regime and Rs.25,000 in case of the new regime when taxable income is less than Rs 700,000.

What tax deductions do Agniveers get under section 80CCH?

Agniveers who work in the Indian Armed Forces can claim a deduction equal to the amount they deposit in the Agniveer Corpus Fund once they get enrolled in the Agnipath Scheme.

How is the house rent allowance calculated?

You can claim the entire house rent allowance or your rent if it is less than 10% of the basic salary and DA. If you reside in a non-metro city, you can claim 40% of your salary (Basic+DA) and 50% of your salary (Basic+DA) if you stay in a metro city.

What is the maximum tax benefit you can claim under children's allowance?

You can claim a maximum tax exemption of Rs.1,200 per year on children allowance offered by your employer. However, this is allowed for a maximum of two children.

Which tax regime is better for 30 lakhs income?

This requires comparative analysis, which is based on your Salary Income, Exemption and deductions applicable to you. You can use our tax calculator and check which is the best option.

About the Author

Ektha Surana

Content Marketer

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

Quick Summary

Individuals earning above 30 lakh face a heavy tax burden, but ways to reduce it exist. Deductions under Income Tax Act help save tax. Old vs new tax regime compared in detail. Various exemptions and deductions available like HRA, EPF, health insurance, charity donations, home loan payments, etc. Example provided on calculating tax liability under both regimes. Investments like EPF, ULIPs, education fees can be considered to maximize savings.