How to free up space in System storage in my ipad??

As you can see from this screenshot, System Data includes various system caches, logs and system resources. The only element that you can directly influence is perhaps your browser caches - which you can manually clear if you wish to do so.

For Safari:

Settings > Safari > Clear History & Website Data

For other browsers, you’ll need to find the relevant section of the App settings - which may be within the App itself.

Otherwise, transient system caches can be significantly reduced by performing a forced-restart of your iPad - although caches, by their nature, will again accumulate and be automatically managed by the operating system.

Forced-restart

• On an iPad with a Home button: Press and hold the top button and the Home button at the same time. When the Apple logo appears, release both buttons.
• On other iPad models: Press and quickly release the volume up button, press and quickly release the volume down button, then press and hold the top button. When the Apple logo appears, release the button.