Income Tax News: For those with high incomes—especially those in the 30 lakh tax bracket—tax planning is essential. Not to mention, salaried individuals may find higher tax rates to be a significant hardship. Thankfully, it is possible to save a significant amount of money on taxes and still support the national economy with careful tax planning and financial management.
Tax Planning for High-Income Individuals
This blog is for you if you make more than or around 30 lakhs per year. We’ll go over some of the best strategies for maximising your income and reducing taxes. The Indian Finance Minister releases the income tax slabs each year. This year, Nirmala Sitharaman revised the previous tax regime when she announced the Union Budget on February 1st, 2023. Consequently, taxpayers are presented with two options with respect to the tax system. It implies that you have the option of declaring your taxes in accordance with the new tax regime or selecting the previous one.
Introduction to Tax Planning for High Incomes
As you can see below, under the new tax regime, individuals earning over 15 lakhs can choose to pay 30% + ₹1,87,500 or 30% + ₹1,12,500 under the previous one. The income tax on a salary of thirty lakhs is the same.
| 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 |
The following are some ways that you can save on the 30 lakh tax slab if your annual income exceeds 30 lakh:-
Invest in Tax-Saving Instruments (Section 80C)
Investing under Section 80C in products like PPF (Public Provident Fund), ELSS (Equity Linked Savings Scheme), NSC (National Savings Certificate), and others is arguably the best method to reduce taxes on the 30 lakh tax slab. If you stick with these investments over time, they can provide respectable returns in addition to tax savings.
Use Health Insurance Policy Premium (Section 80D)
There are good deductions available for health insurance payments under Section 80D of the Income Tax Act. Up to ₹25,000 can be claimed by any individual for health insurance premiums paid for themselves, their spouse, and their kids. You may also receive up to ₹50,000 if you are financing your parents’ health insurance or the health insurance of dependent elderly people. This can save you a significant amount of money on medical bills.
Donate to a Charity (Section 80G)
Contributions to charitable organisations are another way to reduce tax on a high salary. You can save as much as 50% or even 100% of the eligible donation value in this way.
Consider Home Loan Premium Deductions (Section 24b)
You may deduct your home loan payments under Section 24b of the Income Tax Act. Here’s another method for saving taxes on a salary of thirty lakhs. Under Section 80c, you can claim up to ₹1.5 lakh for the principal amount of a home loan, and under Section 24b, you can claim up to ₹2 lakh for the interest amount.
Utilise NPS Contributions (Section 80CCD)
With Section 80c deductions of ₹1.5 lakh, the National Pension Scheme permits you to claim an additional income tax deduction of up to ₹50,000.
Claim HRA Exemptions (Section 10) (13A)
You can rent a home and claim exemptions under Income Tax Act Section 10 (13A) if your salary includes HRA, or home rent allowance.
Consult a Tax Expert
If you’re short on time and lack experience, you might want to consider hiring an income tax expert with experience. They will assist you in making the most tax planning decisions and could result in significant savings.
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