How To Save Tax For Salary Above 30 Lakhs?

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 about how you can save taxes by availing the deductions available under various sections of the Income-tax Act, 1961.

Income Tax Slab Rates For FY 2025-26 (AY 2026-27)

In the Budget 2025, a significant change in the tax slabs and rates was introduced. The slab limits were enhanced to blocks of 4 lakhs and a tax rate of 25% was also introduced. 

The revised tax slabs under the new regime for FY 2025-26 (AY 2026-27) are as follows:

Income Tax Slab Rates For FY 2024-2025 (AY 2025-26)

As per the latest Finance Act 2024, changes have been made in the slab rate for the new tax regime applicable for FY 2024-25 as follows - 

In the new tax regime, the standard deduction has been increased from Rs.50,000 to Rs.75,000, and the deduction on family pension has also been increased from Rs.15,000 to Rs.25,000. 

New tax regime is the default for FY 2024-25. Taxpayers have the option to revert to the old tax regime before filing their income tax returns by submitting Form 10-IEA. It needs to be submitted only If he has business income and this is not applicable if you are filing ITR 1 or 2. 

Furthermore, the rebate under section 87A is Rs 25,000, resulting in zero tax liability for salary income up to Rs 7 lakhs. But for income earned in FY 2025-26, the rebate limit has been increased to Rs. 60,000 meaning taxpayers with total income up to Rs. 12 lakhs will have zero tax liability. 

Keeping this in mind, let us discuss the tax slab rates, deductions, and exemptions available with examples under both regimes.

Income Tax Slabs Under Old vs New Income Tax Regime:

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

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.  

Exemptions and Deductions Available for 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:

Part 2- Deductions

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

How to Save Taxes for an Income of Rs 30 Lakh?

The following tax saving options are available for both old and new regime.

Employer’s Contribution to NPS u/s 80CCD(2)

• Section 80CCD(2) allows deduction for contribution made by employer in National Pension Scheme (NPS). 
• Deduction is available under both new regime for this amount, though the limit for deduction differs according to choice of regime. 

The following table describes the quantum of deduction available under both the regimes for contributions made by the employer in the NPS scheme under section 80CCD (2)

Gift Taxation

• Gifts received either in cash or through kind if the amount or the value of the gift received is up to Rs.50,000 is not taxable under section 56 of the Income Tax Act. 
• If the amount received or the monetary value of the gift received in kind exceeds Rs.50,000, then entire amount is taxable. 
• This tax saving option is available for both old and new tax regimes.

Deduction for Interest on Borrowing for Let Out Property

• If the assessee has rented out his property (residential or commercial building), deduction under section 24 can be availed. 
• The amount of interest paid for amount borrowed for purchase or construction of immovable property can be allowed as a deduction. 
• There is no maximum limit fixed for claiming this deduction. 

Gratuity and Leave Encashment

• Exemption is available for the amount received as gratuity and leave encashment at the end of the employment tenure. The employee may either retire or terminate the employment before retirement. 
• The Income Tax Act provides the maximum amount eligible for deduction for both gratuity and leave encashment. 
• This exemption is equally available for both old and new tax regimes.

Deduction on Additional Employee Cost

Deduction under section 80JJA is available irrespective of choice of regime of the assessee. 30% of the amount expended on additional employees can be allowed as a deduction.  

Deduction on Agniveer Corpus Fund

• Contribution made by the Central Government in Agniveer Corpus Fund of the assessee is allowed as a deduction under section 80CCH(2). 
• Individuals enrolled in the Agnipath Scheme for the armed forces are eligible to claim this deduction.
• There is no maximum limit for deduction under this section. The entire amount contributed by Central Government can be allowed as a deduction
• This deduction is also available under both old and new regimes.

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

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

For FY 2025-26 the tax liability of Mr. A will be calculated as follows under the old and new tax regime:

For a Rs. 30 lakh income earned in FY 2025-26, opting for the new tax regime would be more beneficial for the taxpayer as it would result in a tax saving of Rs. 1,08,576

For FY 2024-25 the tax liability of Mr. A will be calculated as follows under the old and new tax regime:

As per the above computation the Old Tax Regime is more beneficial by Rs. 5,824. 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.

Final Word

From the above examples we get to know that in general, the new tax regime is more beneficial with more relaxed tax slab rates. However, if the taxpayer has significant deductions and exemptions that can be claimed then the old tax regime would be more beneficial. Thus, it is important for the taxpayer to choose the appropriate tax regime to be able to save taxes.

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