Tax to be paid on fd interest

Hi all,

I have a query please respond...

My father is a retired govt. official. He deposited all his savings and PF (app. 40 Lacs)  as FD in different banks. Now in last FY, he earned app. 4 lac as interest (which should be taxable probably). But due to house needs, he took a loan on FD for around rs 14 lacs for which he paid app 160000 as interest. So I want to know whether the tax has to be paid on the total earning on FD or the interest paid on OD could be extempted? 

Thanks and Regards