Income tax on Rs. 30 lakhs salary

On a Rs. 30 lakh salary in FY 2025-26, your tax liability is roughly Rs. 4,75,800 under the new regime, or Rs. 6,70,800 under the old regime with standard deductions claimed.

• New regime: taxable income after the Rs. 75,000 standard deduction is Rs. 29,25,000; tax before cess is Rs. 4,57,500, and Rs. 4,75,800 after 4% cess.
• Old regime: with Rs. 50,000 standard deduction, Rs. 1.5 lakh under Section 80C, and Rs. 25,000 under Section 80D, taxable income is Rs. 27,75,000, and total tax comes to Rs. 6,70,800.
• At this deduction level, the new regime saves you roughly Rs. 1,95,000 compared to the old regime.
• The old regime only becomes cheaper if your total deductions and exemptions exceed roughly Rs. 8 lakh.

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If you are a high-salaried individual, you must plan your taxes strategically to avoid a heavy tax burden and improve savings. You can do this by using various tax-saving instruments and deductions available under the Income Tax Act.

Some key strategies include investing under Section 80C, using deductions under Section 80D for health insurance premiums, Section 80E for education loan interest, and more. Let's look at how you can save tax on a salary above Rs. 30 lakh.

Budget updates relevant to FY 2025-26

Recent budgets have brought several changes easing tax burdens for middle- and high-income earners, especially those with salaries above Rs. 30 lakh. The focus has been on simplification, increased standard deductions, and revised thresholds under the new tax regime.

• Zero tax up to Rs. 12.75 lakh (salaried, new regime): The basic exemption limit under the new regime is Rs. 12 lakh for all individuals. Salaried taxpayers get a Rs. 75,000 standard deduction, making income up to Rs. 12.75 lakh effectively tax-free.
• New tax slab rates: The new regime has seven slabs — from nil up to Rs. 4 lakh, to 30% for income above Rs. 24 lakh.
• Old regime slabs unchanged: 0% up to Rs. 2.5 lakh; 5% from Rs. 2.5–5 lakh; 20% from Rs. 5–10 lakh; 30% above Rs. 10 lakh.
• Minimal deductions in the new regime: Most exemptions like HRA, LTA, Section 80C, and 80D are removed. Only the Rs. 75,000 standard deduction is retained for salaried individuals.

These updates streamline tax compliance while offering relief for salaried individuals in higher tax brackets. With changes to deductions, TDS thresholds, and slab restructuring, taxpayers earning above Rs. 30 lakh annually have new opportunities to structure their investments and salaries more efficiently.

Additional details:

• The Section 87A rebate under the new regime has been increased from Rs. 25,000 to Rs. 60,000.
• This means individuals with taxable income up to Rs. 12,00,000 have zero tax liability under the new regime.
• The rebate does not apply to income taxed at special rates (e.g., capital gains under Section 112A).
• Marginal relief on the rebate remains available to avoid sharp tax increases around the threshold.
• The standard deduction has increased from Rs. 50,000 to Rs. 75,000 under the new regime. The deduction on family pension has also been enhanced, from Rs. 15,000 to Rs. 25,000.

To save tax on a salary above Rs. 30 lakh, you can claim various deductions and exemptions under the Income Tax Act, available primarily under the old regime. Here are some major ones:

Invest in tax-saving instruments (Section 80C)

You can invest up to Rs. 1.5 lakh in instruments like:

• Public Provident Fund (PPF)
• National Savings Certificate (NSC)
• Equity-Linked Savings Schemes (ELSS)
• Tax-saving Fixed Deposits

You can also claim life insurance premiums and your children's tuition fees under this section.

Use health insurance policy premiums (Section 80D)

Claim deductions for health insurance premiums paid for yourself, your family, and your parents.

• The limit is Rs. 25,000 for self, spouse, and children.
• This increases to Rs. 50,000 if your insured parents are senior citizens.

Deduct education loan interest (Section 80E)

• Deduct interest paid on an education loan for higher studies.
• Claimable for up to eight years or until the interest is fully repaid, whichever comes first.

Consider home loan interest deductions (Section 24b)

• Deduct interest paid on a home loan.
• Claim up to Rs. 2 lakh per annum for a self-occupied property.

Utilise NPS contributions (Section 80CCD)

• Under Section 80CCD(1B), invest up to Rs. 50,000 in the NPS.
• This deduction is over and above the Rs. 1.5 lakh limit under Section 80C.

Donate to a charity (Section 80G)

• Claim deductions for donations made to specified charitable institutions and funds.
• The deduction amount varies — either 50% or 100% of the donation amount, depending on the institution.

Claim HRA exemptions (Section 10(13A))

If you live in rented accommodation, you can claim HRA under Section 10(13A), provided:

• You pay rent, and
• Your salary structure includes an HRA component.

Leave travel allowance (LTA)

• Claim LTA for travel expenses incurred for vacations within India.
• Claimable twice in a block of four years.

The Indian income tax system offers two distinct regimes — old and new (the new regime has applied by default since April 1, 2023). Here are the currently applicable slab rates under both:

To maximise tax savings, you must be aware of the various sections under which you can claim exemptions and deductions:

Salary − Exemptions = Taxable salary income Taxable salary income − Deductions = Net taxable income

Reducing your "net taxable income" directly decreases your overall tax liability. Here are key exemptions and deductions:

Part 1 — Exemptions

Part 2 — Deductions

To choose the optimal regime for a Rs. 30 lakh salary, compare your tax liability under both regimes using current FY 2025-26 rules:

At this level of deductions (Rs. 2.25 lakh under the old regime, excluding standard deduction), the new regime works out cheaper by roughly Rs. 1,95,000. The old regime only becomes more beneficial if your total eligible deductions and exemptions — beyond the standard deduction — exceed approximately Rs. 8 lakh, given the wider slabs and higher exemption threshold now available under the new regime.

Effective tax planning is essential to minimise liability and maximise savings on a salary above Rs. 30 lakh. Here are some proven strategies (applicable primarily under the old regime):

Deductions under Sections 80C, 80CCC, and 80CCD

Section 80C allows a maximum deduction of Rs. 1.5 lakh/year for:

• Public Provident Fund (PPF)
• Home loan principal repayment
• Equity-Linked Savings Schemes (ELSS)
• Life insurance premiums
• Employee Provident Fund (EPF)
• Children's tuition fees
• National Savings Certificate (NSC)

Section 80CCC covers pension fund contributions, sharing the Rs. 1.5 lakh limit with Section 80C. Section 80CCD offers additional NPS-linked deductions:

• Section 80CCD(1) falls under the Rs. 1.5 lakh limit.
• Section 80CCD(1B) allows an extra Rs. 50,000 deduction.

Medical costs

• Section 80D: health insurance premiums — up to Rs. 25,000 (self, spouse, children); up to Rs. 50,000 (senior citizen parents).
• Section 80DD: up to Rs. 75,000 (Rs. 1.25 lakh for severe disability) for a dependent with a disability.
• Section 80DDB: medical treatment for specified diseases — up to Rs. 40,000 (below 60 years); Rs. 1 lakh (senior citizens).

Education loan

Under Section 80E, you can claim interest paid on education loans for yourself, spouse, children, or a ward. There's no upper limit on the amount claimed, but the deduction is available for up to eight consecutive years or until the interest is fully repaid, whichever comes first.

Home loan

Under Section 80C, principal repayment of up to Rs. 1.5 lakh annually is deductible. Under Section 24(b), you can claim up to Rs. 2 lakh on home loan interest. First-time homebuyers may also benefit from an additional Rs. 50,000 deduction under Section 80EE, subject to eligibility conditions.

House rent allowance

Claim HRA as the lowest of:

• Actual HRA received
• 50% of salary (metro) or 40% (non-metro)
• Actual rent paid minus 10% of salary

Keep your rental agreements and payment records in order for compliance.

Leave travel allowance

LTA covers travel expenses for you and your family within India, for two journeys in a block of four years, across air, rail, or public transport. Maintain proper documentation, including tickets and boarding passes.

Capital gains

As per current rules:

• LTCG from listed equity investments above Rs. 1.25 lakh in a financial year is taxed at 12.5%, without indexation.
• LTCG from debt mutual funds (units purchased on or after 1 April 2023) is taxed at your income tax slab rate, regardless of holding period, with no indexation benefit.
• LTCG on other assets like property is generally taxed at 12.5% without indexation; certain property purchases made before 23 July 2024 may still choose between 12.5% without indexation or 20% with indexation.

To defer or exempt LTCG tax, you can invest in specified bonds under Section 54EC, or reinvest in residential property under Sections 54 and 54F.

ELSS mutual funds

Investments up to Rs. 1.5 lakh in ELSS qualify for deduction under Section 80C. ELSS has a three-year lock-in — the shortest among Section 80C instruments — and primarily invests in equities, offering potentially higher returns than other 80C options.

For salaried individuals earning around Rs. 30 lakh annually, the new tax regime is favourable if your total deductions and exemptions — excluding the standard deduction — are below roughly Rs. 8 lakh. If your eligible deductions exceed this threshold, the old regime may result in lower tax liability. This break-even point reflects the wider slabs and higher basic exemption now available under the new regime for FY 2025-26; it will vary somewhat by exact income level.

Effective tax planning is essential for individuals earning above Rs. 30 lakh annually in India. By leveraging deductions and exemptions under the Income Tax Act, you can meaningfully reduce your tax burden — if you opt for the old regime. One useful tool is investing up to Rs. 1.5 lakh under Section 80C through instruments like life insurance, PPF, and ELSS.

You can also claim deductions under Section 80D for health insurance premiums and Section 80E for education loan interest, along with home loan benefits under Sections 80C and 24B. However, for many taxpayers at this income level, the new regime's wider slabs and higher exemption threshold now make it the more tax-efficient choice by default — so it's worth comparing both before filing.

Looking to save more on taxes while securing your family's future? Explore life insurance plans tailored to your income and financial goals today. Get quote!

Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors.

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