Fixed deposits (FDs) have gained popularity with banks offering up to 9% interest. However, it’s crucial to understand that the post-tax return on FDs often falls below the advertised interest rate due to Tax Deducted at Source (TDS). As per section 194A, TDS is deducted if the annual interest exceeds Rs 40,000. For instance, if an individual earns Rs 55,000 interest annually, the bank will deduct 10% TDS. Providing a PAN card is crucial to avoid a higher TDS rate of 20%. Individuals must include interest income in their tax returns and pay any additional tax liability based on their overall income and tax slab.