**Correct option is (b) 18%**

Additional charge allowance = Rs. 2000

Income-tax on charge allowance = Rs. 2000 x 30/100 = Rs.600

By depositing Rs.1000 per month in long-term saving,additional tax is reduced by 10%,i.e., the income is reduced by Rs.60.

In this way the person concerned get

= Rs.60 + 12% of Rs.1000

= Rs.60 +1000 x 12/100 = Rs.60 +Rs.120

= Rs.180

Effective interest on Rs.1,000 = Rs.180

Effective interest on Rs.100 = Rs.180/1000x100=18

Hence,effective interest rate** = 18%.**