Interest on these certificates shall be liable to tax under the Income-tax Act, 1961 (43 of 1961), on the basis of the annual accrual specified in rule 15, but no tax shall be deducted at the time of payment of discharge value.
The maturity period of a certificate of any denomination shall be ten years commencing from the date of the certificate. The amount, inclusive of interest, payable on encashment of a certificate at any time after the expiry of its maturity period shall be Rs. 234.35 for denomination of Rs. 100 and at proportionate rate for any other denomination. The interest specified in the Table below shall accrue to the holder or holders of the certificate at the end of each year and the interest so accrued at the end of each year up to the end of the ninth year, shall be deemed to have been re-invested on behalf of the holder and aggregated with the amount of face value of the certificate.
The year for which interest accrues
Amount of interest (Rs.) accruing on certificate of Rs. 100 denomination