I was searching for different options. But I was not able to find a one. is it possible to update windows 8 to 8.1?
I would suggest you wait for couple of days as you’ll get Lumia Cyan firmware update first so you don’t run into any issues later. The problem is if you upgrade to WP 8.1 before Lumia Cyan, you need to wait for a Bitlocker and low memory space fixes that the WP team is still working. If you do other way round, you don’t have to worry about it then.
In case you are too excited to wait, you can get WP 8.1 and GDR 1 update by registering for Developer preview and follow steps mentioned here – http://dev.windows.com/en-us/develop/devpreview
Note: Register using Option 2: Build apps using App Studio -> free option
The Nokia Cyan update which includes the update to 8.1 is available for most operators, in most countries for the Lumia 520 now, and should be available by going to Setttings -> phone update -> [ check for updates ]
You will need to be connected to a WiFi network to download and install the update. You may also need to temporarily remove some apps to free up enough storage space for the installation.