Abstract Understanding the spectral evolution along the “Z”-shaped track in the hardness–intensity diagram of Z sources, which are a class of luminous neutron star low-mass X-ray binaries, is crucial to probe accretion processes close to the neutron star. Here, we study the horizontal branch (HB) and the normal branch (NB) of the Z source GX 340+0 using AstroSat data. We find that the HB and the NB appear as two different types of X-ray intensity dips, which can appear in any sequence and with various depths. Our 0.8–25 keV spectra of dips and the hard apex can be modeled by the emissions from an accretion disk, a Comptonizing corona covering the inner disk, and the neutron star surface. We find that as the source moves onto the HB, the corona is replenished and energized by the disk and a reduced amount of disk matter reaches the neutron star surface. We also conclude that quasiperiodic oscillations during HB/NB are strongly associated with the corona and explain the evolution of strength and hard lag of this timing feature using the estimated coronal optical depth evolution.