Wether post office mis on maturity taxable or not

Dear Mr. Viren !

Income one earns from Post office MIS Scheme on monthly basis is taxable. The investment + any capital appreciation is not taxable.

Let us examine an example:

Mr. A invested a sum of rupees one lakh in MIS. He received an  income of (say) Rs.750/- per month. This monthly income is taxable. On maturity he received back his investment plus 5% ie Rs 1,05,000/-

This amount of 1,0,5000/- is not taxable. The addition of Rs.5000/- being capital receipt is exempt under I.T Act.

exempt under which section?

where to consider mis matured and bonus received from po