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How to Save Tax for Salary Above 30 Lakhs?

Tax savings can be maximised by utilising tax deductions under Income Tax Act Section 80C, D and E. These include investing in tax-saving instruments, utilising health insurance premiums, and some others. Read on for more!
 

Tax planning plays a crucial role for high-income individuals, especially those who belong to the 30 lakh tax slab. Not to mention, higher tax rates can be a heavy burden on salaried people. 
 

Thankfully, with proper tax planning and financial management, it is possible to save a good amount on tax while still contributing to the nation’s economy. 
 

If you earn above or around 30 lakhs, this blog is for you. We will discuss some of the best ways to save tax and optimise your earnings. Keep reading!

Income Tax Deductions for Salary Above 30 Lakhs

Income tax slabs are announced every year by the finance minister of India. This year, when announcing the Union Budget on February 1st, 2023, Nirmala Sitharaman introduced a new tax regime, revising the old one.
 

As a result, taxpayers now have two choices regarding the tax regime. It means you can either choose the old tax regime or declare your taxes with respect to the new tax regime. 
 

As you can see below, individuals with a salary of more than 15  lakhs can either pay 30% + ₹1,87,500 with the new tax regime or 30% + ₹1,12,500 with the old one. The same goes for income tax on 30 lakhs salary.
 

Annual Income 

New Tax Regime (FY 2023-24)

Old Tax Regime (FY 2022-23)

Up to ₹2.5 lakhs

No Tax

No Tax

> ₹2.5 lakhs – ₹5 lakhs

5%

5% (Rebate)

> ₹5 lakhs – ₹7.5 lakhs

10% + ₹12,500

20% + ₹12,500

> ₹7.5 lakhs – ₹10 lakhs

15% + ₹37,500

20% + ₹12,500

> ₹10 lakhs – ₹12.5 lakhs

20% + ₹75,000

30% + ₹1,12,500

> ₹12.5 lakhs – ₹15 lakhs

25% + ₹1,25,000

30% + ₹1,12,500

> ₹15 lakhs and above

30% + ₹1,87,500

30% + ₹1,12,500

Ways to Save Tax on 30 Lakh Salary

 

 

If you earn more than 30 lakhs per annum, you can save on 30 lakh tax slab in the following way:
 

  • Invest in Tax-Saving Instruments (Section 80C)

    Perhaps the most effective way to save tax on the 30 lakh tax slab is by making investments under Section 80C in instruments like PPF (Public Provident Fund), ELSS (Equity Linked Savings Scheme), NSC (National Savings Certificate), and more. Besides helping you save tax, these investments can also offer decent returns if you stay invested for the long term. 

  • Use Health Insurance Policy Premium (Section 80D)

    Section 80D of the Income Tax Act offers good deductions on health insurance payments. Any individual can claim up to ₹25,000 on health insurance premiums paid on themselves, their spouse, and their children. 

    Moreover, if you are paying for health insurance policies for your parents or dependent senior citizens, then you can claim an amount of up to ₹50,000. This can help you in saving a huge amount on healthcare expenses. 

  • Donate to a Charity (Section 80G) 

    Another way to save tax on a high salary is to donate to a charitable organisation. In this way, you can save up to 50% and even 100% of the eligible donated value. 

  • Consider Home Loan Premium Deductions (Section 24b)

    Under Section 24b of the Income Tax Act, you can claim deductions on your home loan payments. This is another way to save tax on 30 lakh salary. If you have a home loan, you can claim up to ₹1.5 lakh on the principal amount (Section 80c) and up to ₹2 lakh on the interest amount (section 24b). 

  • Utilise NPS Contributions (Section 80CCD)

    The National Pension Scheme allows you to claim an additional income tax deduction of up to ₹50,000 with ₹1.5 lakh deductions utilising Section 80c. 

  • Claim HRA Exemptions (Section 10) (13A)

    If your salary includes HRA or Home Rent Allowance, then you can use it to rent a house and claim exemptions under the Income Tax Act Section 10 (13A). 

  • Consult a Tax Expert

    If you don’t have a lot of experience and have time constraints, then consider hiring an experienced income tax professional. They will help you plan your taxes in the best way and may help you save a good amount.

Old Vs New Tax Regime: Which One is Better?

The old tax regime offers deductions under several sections, making it useful for individuals with higher but complex to navigate deductions. On the contrary, the new tax regime offers reduced tax rates but does not allow most deductions, making it beneficial for individuals with a smaller number of deductions. 
 

The right income tax regime for an individual will depend on their financial situation and personal preferences. 
 

Hence, it is advisable to determine the tax liability under both schemes and then make the right decision.

Final Words

To avoid the financial burden and better financial management, you can consider several ways in which you can save tax on 30 lakhs salary. From purchasing health insurance policies and investing in tax-saving instruments to claiming HRA exemptions, we have discussed multiple ways to reduce your tax liability. 
 

Regarding the choice of the right tax regime, consider calculating your tax liabilities under both regimes to determine the most suitable for your financial situation. Alternatively, you can also hire a tax professional for better assistance in the tax-claiming process.
 

We hope it helps!

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Which tax regime is better for 30 lakhs?

If your tax deductions are less than ₹3,75,000, then the new tax regime will be a better option for you. For higher deductions than this amount, opt out of the old regime.

What is the income tax 30 lakh tax slab?

If you are earning above 30 lakh, then you fall under the 30% slab. It means the income tax rate for you will be 30% of your annual income.

Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.