In general terms rental income earned by you will be taxable subject to permissible deductions and crossing the taxable income limit.
However in your case there is no tax due as detailed below:
12 months' rental income 12*20000 = 240,000
Less: 30% statutory allowance = 72,000
Taxable income = 168,000
Income upto Rs.180,000 is not taxable in case of an individual.Hence you are not liable to any income tax.I am assuming your income by way of interest earned on NRO A/c is negligible. The same is part of taxable income otherwise. Please also note that you can deduct municipal taxes,if any,paid by you (not by the tenant) during the year from gross rental income before applying 30% statutory allowance.
On tax deductions for investment in mutual fund: Equity Linked Savings Schemes (ELSS) qualifies under
Section 80C of the Income Tax Act (upto Rs. 1 Lac) for tax deductions.
Section 80C also offers tax benefits for other investments like life
insurance premium, contribution to PF/PPF, NSC, infrastructure bonds,