TAX CALCULATION on 4 LAC PER ANNUM?

Basic: 160000, HRA: 80000, Conveyance: 9600 , Education Allowance: 2400, Other Allowances: 128800, Provideent Fund: 19200

What are best options available for tax saving as per my pay howmuch and how i invest for tax saving? I am live in rented house, please suggest?

Do I have to pay income tax on the surrendered value of Insurance policy?

I have purchased an insurance policy in the year 2007 and was paying premium of around 32,000 per annum. After 3 years of mandatory premium payment, I surrendered my policy and received a surrendered amount of around INR 58,000/-. The total premium that I have paid for 3 years is around INR 96,000/-.

Do I have to pay income tax on the Surrendered value (INR 58,000/-) that I received, which is lesser than the paid premium?