(1) In this section 'specified interest' means interest arising to a person in respect of a deposit in relation to which a declaration has been made by the person under subsection (1A), (1B), or (1C) of section 256 and which is not included in relevant interest for the purposes of paragraph (c)(i)(II) of section 261.
(2) Notwithstanding section 15, where the taxable income of that person includes specified interest, the part of taxable income, equal to that specified interest, shall be chargeable to tax at the rate at which tax would have been deducted, from that interest, if a declaration under subsection (1A) or (1B) of section 256 had not been made.
(3) Section 246(2) does not apply to a payment of specified interest if it would otherwise apply.