If you are a high-salaried individual, you must plan your taxes strategically. This helps in avoiding a heavy tax burden and leads to more savings. You can do so by utilising various tax-saving instruments and deductions available under the Income Tax Act.
Some key strategies include investing in tax-saving instruments under Section 80C, using deductions available under Sections 80D for health insurance premiums, 80E for education loan interest, and more. Let’s understand how you can save tax for a salary above Rs. 30 lakh in detail.
Budget 2025 update
Budget 2025 brought several key changes aimed at easing tax burdens for middle- and high-income earners, especially those with salaries above Rs. 30 lakh. The government focused on simplification, increased standard deductions, and revised thresholds under the new tax regime. These changes are especially relevant for salaried individuals evaluating how to optimise their tax liabilities in FY 2025–26.
Zero tax up to Rs. 12.75 lakh (salaried under new regime): Under the new tax regime, the basic exemption limit is Rs. 12 lakh for all individuals. Salaried taxpayers get a Rs. 75,000 standard deduction, making income up to Rs. 12.75 lakh tax-free.
New income tax slab rates: The new regime has seven slabs—starting from 0% for income up to Rs. 4 lakh and going up to 30% for income above Rs. 24 lakh.
Old income tax slabs unchanged
The old regime continues with standard slabs:
0% up to Rs. 2.5 lakh
5% from Rs. 2.5 lakh to Rs. 5 lakh
20% from Rs. 5 lakh to Rs. 10 lakh
30% above Rs. 10 lakh
Minimal deductions in the new regime: The new regime removes most exemptions like HRA, LTA, Section 80C, and 80D. Only the Rs. 75,000 standard deduction for salaried individuals is retained.
Key Budget Highlights for High-Income Earners
Provision |
Previous Limit |
Updated Limit (Budget 2025) |
Standard Deduction |
Rs. 50,000 |
Rs. 75,000 |
30% Tax Slab Starts From |
Rs. 15 lakh |
Rs. 20 lakh |
Rebate under 87A (New Regime) |
Up to Rs. 7 lakh |
Up to Rs. 7.5 lakh |
TDS Threshold on Rent |
Rs. 2.4 lakh |
Rs. 6 lakh |
LTCG on Debt Funds |
Taxed with indexation |
Taxed without indexation |
Removal of Section |
— |
206AB & 206CCA omitted |
These updates aim to streamline tax compliance while offering some relief for salaried individuals in higher tax brackets. With changes to deductions, TDS thresholds, and slab restructuring, taxpayers earning above Rs. 30 lakh annually now have new opportunities to structure their investments and salaries more efficiently.
Tax slab changes from FY 2025-26 (AY 2026-27)
Annual Income Range (Rs.) |
Applicable Tax Rate |
Up to 4,00,000 |
Nil |
4,00,001 – 8,00,000 |
5% |
8,00,001 – 12,00,000 |
10% |
12,00,001 – 16,00,000 |
15% |
16,00,001 – 20,00,000 |
20% |
20,00,001 – 24,00,000 |
25% |
Above 24,00,000 |
30% |
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 income up to Rs. 12,00,000 will 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 tax burden spikes around threshold limits.
In addition to revised slabs, the standard deduction has been increased from Rs. 50,000 to Rs. 75,000 under the new regime. Similarly, the deduction on family pension has been enhanced from Rs. 15,000 to Rs. 25,000, offering further tax relief to eligible taxpayers.
How to save tax for salary above 30 lakhs?
To save tax on a salary above 30 lakh, you can claim the various deductions and exemptions available under the Income Tax Act. Let’s have a look at 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), and
- Tax-saving Fixed Deposits.
- Also, you can claim premiums paid or life insurance policies and the amount paid for tuition fees of your children’s education.
Use Health Insurance Policy Premium (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
- However, this limit gets increased to Rs. 50,000 if your insured parents are senior citizens.
Section 80E
- Deduct the interest paid on an education loan for higher studies
- You can claim this deduction for up to eight years or until the interest is fully repaid, whichever comes first.
Consider Home Loan Premium Deductions (Section 24b)
- Deduct the interest paid on a home loan
- You can claim up to Rs. 2 lakh per annum for a self-occupied property.
Utilise NPS Contributions (Section 80CCD)
- Under Section 80CCD(1B), you can invest up to Rs. 50,000 in the NPS
- It is essential to note that 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 amount of deduction varies based on the institution and is either 50% or 100% of the donation amount.
Claim HRA Exemptions (Section 10) (13A)
- If you live in rented accommodation, you can claim HRA as per Section 10(13A)
- However, you will get this deduction only if:
- You pay rent
and - Your salary structure includes an HRA component.
- You pay rent
Leave Travel Allowance (LTA)
- Claim LTA for travel expenses incurred for vacations within India
- This can be claimed twice in a block of four years.