If you have an education loan running, paying it back should be your priority. You get a tax benefit under Section 80E for paying the interest back. Also, financial planners suggest prepaying a loan after the moratorium period rather than investing as there will be no prepayment charges. If this your first job and your basic is higher than `15,000, you may even consider opting out of the EPF and instead pay back the loan. It is better better to pay back a loan where you are paying 12-13% interest than invest in an instrument that fetches you 8.7% returns. Prepaying in the earlier years is a tax-efficient strategy as well, when the interest component is higher. This is because there is no cap on how much you can claim under Section 80E. However, you have a time limit of eight years to claim this benefit.

Another benefit that people living with family miss on is HRA. Even if you are living with parents, you can claim a deduction for house rent, provided your parents own the house. They will be taxed on this, but can claim a flat 30% of the annual rent as deduction for maintenance expenses such as repairs, insurance, etc., irrespective of the actual incurred expenditure. So, if you pay `12,000 a month, your parents will have to pay tax on only `1 lakh. Even if this earning is above the the basic `2.5 lakh exempt limit (`3 lakh if they are above 60 and up to `5 lakh if above 80 years of age), you can make it tax-free. The amount above the basic exemption limit can be invested in their name under tax-free Section 80C options