A salary above Rs. 30 lakhs can help you enjoy financial stability and a sense of accomplishment. But it becomes trouble when it brings a significant tax burden, often eating into a large chunk of your earnings.
However, efficient tax planning with a salary above Rs. 30 lakhs can help you cut down on tax liabilities by utilising the new or old tax regime to your fullest benefit.
This article will explore how to save tax for salary above Rs. 30 lakhs so that you can maximise your tax savings and save more money.
Key Updates in Budget 2025
The Union Budget has introduced a new tax regime that has brought some key updates to income tax slabs and tax relief options, including:
1. Updated slab rates that lower the income tax rate for almost all income brackets.
2. Increase in standard deduction from Rs. 50,000 to Rs. 75,000.
3. Increase in family pension tax deduction from Rs. 15,000 to Rs. 25,000.
The following table illustrates the updated income tax rates for the fiscal year 2025-26 according to the new tax regime:
Total income in rupees
Rate of tax
Up to 4 lakhs
0%
4 to 8 lakhs
5%
8 to 12 lakhs
10%
12 to 16 lakhs
15%
16 to 20 lakhs
20%
20 to 24 lakhs
25%
Over 24 lakhs
30%
Old vs New Regime Tax Rate Comparison
The new tax regime is the default for taxpayers. However, you can still opt for the old tax regime if the deductions and exemptions claimed under it benefit you more in cutting down on tax liabilities.
The following table illustrates the difference in tax rates according to the old vs new tax regimes:
Total income in rupees
Tax rate in the old regime
Tax rate in the new regime (2025)
Up to Rs. 2.5 lakhs
0%
0%
Rs. 2.5 lakhs – Rs. 4 lakhs
5%
0%
Rs. 4 lakhs – Rs. 8 lakhs
5%
5%
Rs. 8 lakhs – Rs. 12 lakhs
20%
10%
Rs. 12 lakhs – Rs. 16 lakhs
30%
15%
Rs. 16 lakhs – Rs. 20 lakhs
30%
20%
Rs. 20 lakhs – Rs. 24 lakhs
30%
25%
Over Rs. 24 lakhs
30%
30%
While the income tax rate for salary above 30 lakhs is the same in the old and new regimes, you can use the exemptions and deductions you are eligible for to maximise tax savings.
How to Save Tax on Rs. 30 Lakhs Salary
If you earn Rs. 30 lakhs salary or more, you do not have to pay taxes on your total income. Your annual salary minus tax exemptions is your actual taxable salary income, while your taxable salary income minus tax deductions is your net taxable income.
After applying exemptions and deductions to your total salary, you only have to pay taxes on the amount left. Thus, maximising tax deductions and exemptions is key to saving tax on 30 lakh salary.
Best Ways to Save Tax on Rs. 30 Lakhs Salary
The following best practices can help you determine how to save tax on salary income of Rs. 30 lakhs:
1. Make full use of deduction under Section 80C by investing in tax-saving instruments such as the National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF), and Employee Provident Fund (EPF).
2. Invest in health insurance premiums for yourself and your dependents to claim tax deductions up to Rs. 25,000 under Section 80D. Additionally, senior citizens, individuals over the age of 60, can claim deductions up to Rs. 50,000.
3. Under Section 80C, you can claim tax deductions up to Rs. 50,000 with Rs. 1.5 lakh deductions by contributing to the National Pension Scheme.
4. If your salary qualifies you for House Rent Allowance (HRA), you can use it to claim tax exemptions under Section 10(13A).
5. Under Section 24B, you can claim deductions on home loans up to Rs. 1.5 lakhs on the principal amount and up to two lakh rupees on the interest amount.
6. Under Section 80G, you can claim a tax deduction on donations to registered charitable organisations, including religious and political organisations.
7. Section 80E allows you to claim deductions up to Rs. 1.5 lakhs on education loans that you take out for yourself or your dependents for a maximum period of eight years.
Wrapping Up
Careful tax planning and complete analysis of your salary according to the old vs. new tax regime can help you determine how to save tax on salary income of Rs. 30 lakhs.
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Which tax regime is better for Rs. 30 lakhs income?
The choice of a better tax regime can vary from person to person, even in the same income bracket. The best tax regimes for Rs. 30 lakhs income will depend on your salary income and the deductions and exemptions you are eligible for. Calculate your taxes to compare both regimes. Generally, people without significant savings or deductions should go for the new regime for more tax savings.
At what point can I opt for the old regime given my salary of Rs. 30 Lakhs?
If the tax deductions you are eligible for allow you to deduct over Rs. 3,75,000 from your payable tax amount, you should opt for the old regime to save tax on Rs. 30 lakhs salary.
How to save maximum tax on a 30 lakh salary?
Careful tax planning will help you maximise your tax savings. You must use all the applicable deductions and exemptions to their fullest capacity, including investments under Section 80C (for deduction up to Rs. 1.5 lakhs), health insurance premium under Section 80D (up to Rs. 25,000), interest on loans for higher education under Section 80E (without limit), etc.
10 March 2025
4 mins read
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