How to save income tax?

Dear Sir,
I m working in Telecom company and getting 3.5 lacs/ per ann.
I have not invested any amount ..my company deduting tax Rs. 3000 approx. from april 2007.
I m interested to buy a LIC policy but this is not enough saving.
I also doing MBA from distance learning centre. can tax exemption on study or higher study.
Plz provide investment plan in details. I m eligible for T-return next year ( 2007-2008).

First of all you should decide your expenses and thereafter if anything remains as surplus you can think of investment. As per information supplied by you you are getting approximately Rs.30,000 per month. Now you can request your employer to bifurcate your salary as follows:-

Basic 5,000
D.A 10,000
Conveyance 5,000
House Rent Allowance 10,000

Now, Conveyance will be exempted as you are spending the same for going to office. Show the house rent paid to your family members if you are staying in their house and if actual rent is being paid then the actual rent., partly it will also be exempted then buy a Life Insurance Policy if you can afford,\. The tax shall come down to near about Zero.

You can claim a deduction in respect of any interest on any loan taken for the purpose of education.

You can also invest in PPF, NSC and other investments upto Rs 100000 and also take a mediclaim policy upto Rs 10000

Under section 80 C you can save up to Rs. 100000/-. Your professional tax ,if any, can also be deducted straight away from your income. Also you can avail a mediclaim policy of premium 15000 per annum. You may avail a home loan from your company or from any home loan agency approved by your company , so that the interest accrued for the loan is also exempted for your income subject to a maximum of 250000 or so. If you stay in a quarters provided by the company , your HRA also get exempted provided you pay for the accommodation. Now you work out and see how nil tax can be obtained

SHOW YOUR HOUSE RENT.MEANS YOUR ARE LIVING WITH UR FAMILY AND UR PAYING RENT TO UR FATHER MONTHLY OR YEAR. INVEST IN TAX SAVER FUNDS OR MUTUAL FUNDS WHICH HELP U TO SAVE AND GAIN PROFIT.

Just meet some financial advisor. They will help u.

There are so many options by that you can save your tax like PPF, NSC, Mutual Funds, Life insurance, Med-claim last two are the good option for saving, tax saving and financial help in case of odd circumstances for you and your family.

to invest your money in different field