21 July 2010
1) Interest on these term deposits shall be liable to tax under the Act, on the basis of annual accrual or receipt, depending upon the method of accounting followed by the assessee. (2) The tax on such interest shall be deducted in accordance with the provisions of section 194A or section 195 of the Act.
Ref :- CBDT Notification No. 203/2006
Principal amount received on maturity is tax free.
Accrued interest will not qualify as investment u/s 80C.
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