Tax Savings Strategies for Salary above Rs 30 lakh in India

How to save tax for salary above Rs. 30 lakhs or more?
 

Here are some ways that can help you save tax –

1. Choose the right regime
 

The Union Budget 2020 introduced the new tax regime, which offers low tax slab rates¹. However, most of the deductions and exemptions available under the old tax regime are not allowed under the new regime¹. In the Union Budget 2024, the new tax regime slabs were modified and made more attractive³.

The new regime has been made the default regime for taxpayers². However, you can file your returns under the old regime, too.

So, if you wish to know how to save tax on 30 lakh salary, it is better to calculate your tax liability under both new and old tax regimes. The regime that offers a lower the lowest tax liability can be chosen.

2. Claim the standard deduction.
 

The new tax regime allows a flat standard deduction of ₹75,000 for all salaried employees from the financial year 2024-25³. If you file your returns under the new regime, claim this deduction and reduce your taxable salary.

3. Use deductions under the new regime.
 

While the new tax regime does not allow the commonly available deductions available under the old regime, there are exceptions².  You can claim the following deductions under the new regime too³ –

• Transport allowance for the specially-abled employees
• Conveyance allowance received for conveyance expenditure incurred as part of your employment
• Compensation received to cover the cost of travel on or tour incurred or transfer for employment
• Daily allowance received for working in another location than your current place of duty
• Perquisites received for official purposes
• Employer’s contribution to the National Pension System (NPS) accounts under Section 80CCD(2) of up to 14% of salary.
• Family pension income.

So, check all deductions in both tax regimes to learn more about how to save tax on salary income of 30 lakhs.

4. Utilise Section 80C deductions
 

The section provides tax benefits to individuals and HUFs (Hindu Undivided Families). If you are filing your returns under the old tax regime, you can claim a deduction of up to ₹1.5 lakhs under Section 80C⁴. The section allows deductions for different types of investments and expenses. Some of the eligible ones are as follows⁴ –

• Life insurance premium paid
• Equity Linked Saving Scheme (ELSS)
• Public Provident Fund (PPF)
• Employees’ share of  Provident Fund (EPF)
• Sukanya Samriddhi Yojana (SSY)
• 5-year fixed deposit schemes
• Senior Citizen Saving Scheme (SCSS)
• Home loan principal repayment
• Stamp duty and registration charges
• Tuition fee paid for up to two dependent children¹⁰, etc.
   

5. Health insurance
 

A health insurance policy also helps you save tax under Section 80D if you file your returns under the old tax regime⁵. This section is also available for individuals and HUFs.

You can claim a deduction of up to ₹25,000⁵ if you are below 60 and ₹50,000⁵ if you are a senior citizen for health insurance premiums paid for yourself, spouse, and children.

If you pay the premium for your parents’ health insurance plan, too, you can claim an additional deduction of up to ₹25,000⁵ if your parents are below 60 or ₹50,000⁵ if they are senior citizens (above 60 ). This allows you to claim a maximum deduction of up to ₹1 lakh75 thousand1 lakh⁵.
 

6. Get a Home loan
 

A home loan can also help you save taxes under the old regime⁶. The home loan availed for buying the property is a tax-efficient financial solution. Here’s how –

• The principal repaid qualifies for a deduction under Section 80C up to ₹1.5 lakhs⁶
• Stamp duty and registration charges also qualify for 80C deduction⁶
• The interest paid on the loan also qualifies as an exemption under Section 24(b) up to a limit of ₹2 lakhs⁶.
   

7. Use the other available deductions under Chapter VI A
 

Chapter VI A of the Income Tax Act allows you other deductions, too, under the old regime¹¹⁷. You can maximise these deductions to save taxes. Some of the popular deductions are as follows –
 

 

Use these tax-saving strategies and plan your finances efficiently. A life insurance policy can not only help you save taxes on the premiums paid, but the benefits received also enjoy tax exemption (subject to specific provisions)⁸. Plus, the added insurance coverage provides financial security.

So, before thinking about how to save tax on 30 lakhs salary, it is better to plan your taxes in advance and enjoy the perks of a high salary without the burden of high tax liability.

FAQs
 

1. Is it possible to save 100% tax?
 

If your salary is ₹30 lakhs or above, it is not possible to reduce your tax liability to zero. You can use tax-saving strategies to reduce tax liability, but there will be some tax that you will have to pay.The possibility to save tax depends on your income. If your income is below the threshold limit, you can save tax. However, if your income is higher, tax might be payable.
 

2. If my CTC is ₹30 lakhs, what will be the take-home salary?
 

The take-home salary will depend on your allowances, exemptions, perquisites, TDS deducted by the employer, etc. You can check with your employer about the take-home salary that you will receive every month after making all the necessary deductions.
 

3. What is the tax slab rate on ₹30 lakhs salary?
 

The tax slab rate will depend on the net taxable income which will include your salary after deductions and other incomes that you earn in a financial year. However, if you assume a net taxable income of ₹30 lakhs, the tax slab rates under both regimes will be 30%⁹.

 

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