Zero coupon bond discount deduction follows pro rata allocation over bond life, with strict notification and issuance conditions. Deduction is available for the discount on a zero coupon bond on a pro rata basis over the life of the bond, not in a lump sum. Discount means the difference between the issue price and the maturity or redemption value, and the deduction is allocated by calendar months, with partial months of 15 days or more counted as full months. Notification of a zero coupon bond requires a prescribed application, eligible issuer, minimum and maximum bond life, investment grade ratings, listing arrangements, and compliance with the prescribed investment schedule.