taxation of interest income

I recently received my tax credits notice from the Revenue Commissioners. I was surprised by one item, an adjustment for 'taxed income'. This represents deposit interest from a bank from which DIRT is deducted. My standard rate band is reduced by the amount of this income (€204). This surprised me since I understood that DIRT satisfied this tax liability so why adjust the standard rate band? Then it occurred to me that this income 'uses up' some of my standard rate band so there is less of the band available for my PAYE income. This would imply that deposit interest is still in effect taxable at the higher rate of tax for people who pay the higher rate and who have income other than deposit interest income.

Can anyone advise whether the above analysis is correct?

Interest subject to DIRT is only liable to tax at the standard rate. I would guess that the Revenue have miscoded the interest as non-DIRT.

Thanks c1966.