Section 7 in The Compulsory Deposit Scheme (Income Tax Payers) Act, 1974
7. Compulsory deposit to carry simple interest.
(1)Every compulsory deposit made by or recovered from a depositor shall carry simple interest at a rate equal to the bank deposit rate.Explanation.- In this sub- section," bank deposit rate" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949 . (10 of 1949 .)(2)The interest shall be calculated in such manner as may be specified in the scheme framed under section 19,(3)For the purposes of the deduction under section 80L of the Income- tax Act, interest received on a compulsory deposit shall be deemed to be interest received on a deposit with a banking company to which the Banking Regulation Act, 1949 , applies.
