Explanation:

- To find the compound interest for 3 years on a principal of Rs 1000 at a rate of 20% per annum, the formula is A = P(1 + r/n)^(nt). Here, P = 1000, r = 0.2, t = 3, and n = 1 (compounded annually).

- Compound Amount = 1000(1 + 0.2)^3 = 1000 * 1.728 = Rs 1728.

- Compound Interest = Rs 1728 - Rs 1000 = Rs 728.

- To find the simple interest, use the formula SI = P * r * t. So, SI = 1000 * 0.2 * 3 = Rs 600.

- The difference between compound interest and simple interest in this case is Rs 728 - Rs 600 = Rs 128.

- Correct Answer: Option 3, 128.

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