Some media and news channels interpreted yesterdays Budget statement on TDS at source on Fds. Interest limit for TDS on FDS raised from 10000 Rs to 50000 Rs for senior citizens . It was interpreted that they need not pay tax on interest up to 50000 Rs on FDs. Is it really so ? Will it absolve us from responsibility of paying tax on interest ? As far as I know whether interest is deducted at source or not , it should be added to our income and we should pay required tax on total income including interest at the time of filing returns as per income tax slab rules. Somebody may correct me. This is what I am doing every year as per auditor’s advice. Let us assume that a retired employee got Rs 30 Lakhs retirement benefit, including his additional savings from balance salary every month , after paying income tax by sacrificing present needs for future. We assume that he invested all amount PSU Bank FD for safety. He is likely to get Rs 15ooo / month interest on it. Let us assume that he gets monthly pension of say, Rs 30000. His total annual income is 12*( 30000+15000) = 5,40,000 Rs. After removing 40000 RS standard deduction , it is 500000 Rs. Let us assume that another 50000 or so can be claimed for medical expenses. Stilt balance income is 4,50,000 RS. Now they are required to pay a tax on balance income of ( 450000-30000)= 150000 at 5% rate. It amounts to 7500 Rs. If person saves more during service and puts in FD, it is likely that he may go into 10% slab also. TDS removal is helpful for only those persons, whose total income from pension, interest is below 3 Lakh Rs. or 4 Lakh Rs, if we allow for Standard deduction and medical claims. The amount put in FD is balance amount after paying IT. Interest given by banks don’t preserve its true value over time. Hence tax on interest amount to double taxation. If at all , in any year , interest exceeds inflation rate, balance amount of interest after adjusting inflation , only should be taxed.