Savings Account Interest Calculator
Calculate interest earned on your savings account — daily balance method (RBI mandate)
How Savings Account Interest Works in India
Since April 2010, the Reserve Bank of India mandates that all banks calculate savings account interest on the daily closing balance — not on the minimum monthly balance as it used to be. This means every single rupee in your account earns interest every single day. The formula is:
Daily Interest = (Balance × Rate × 1) ÷ (365 × 100)
Interest is typically credited quarterly or semi-annually by most banks. The daily calculation removes the old incentive of gaming your balance around the "minimum balance" date.
Current Savings Account Rates (June 2026)
| Bank | Rate (General) | Balance Condition |
|---|---|---|
| State Bank of India (SBI) | 2.70% | All balances |
| HDFC Bank | 2.75% | Up to ₹50 lakh |
| ICICI Bank | 2.75% | Up to ₹50 lakh |
| Axis Bank | 2.75% | Up to ₹50 lakh |
| Kotak Mahindra Bank | 4.00% | All balances |
| IDFC FIRST Bank | 6.50% | Up to ₹1 crore |
| AU Small Finance Bank | 6.75% | Up to ₹25 lakh |
| Equitas Small Finance Bank | 7.00% | Up to ₹5 lakh |
| Post Office Savings Account | 4.00% | All balances |
Rates as of June 2026. Major private banks (HDFC, ICICI, Axis) cut savings rates by 25bps in early 2026 following RBI repo rate cuts. Small finance banks continue to offer significantly higher rates.
Tax Treatment: Section 80TTA and 80TTB
Savings account interest is taxable under "Income from Other Sources." However, there are important exemptions:
| Who | Section | Deduction Limit | Covers |
|---|---|---|---|
| Individuals below 60 | 80TTA | ₹10,000/year | Savings account interest only (not FD) |
| Senior Citizens (60+) | 80TTB | ₹50,000/year | All bank deposit interest (FD + savings + RD) |
Interest beyond these limits is added to total income and taxed at your slab rate. No TDS is typically deducted on savings account interest, so you must self-declare in your ITR.
Why Small Finance Banks Offer Higher Rates
Small Finance Banks (SFBs) like IDFC FIRST, AU, Equitas, and Ujjivan offer savings rates of 5–7% — 2 to 3 times higher than SBI or HDFC. Why? SFBs need to attract deposits to fund their microfinance and MSME lending portfolios. They can afford higher deposit rates because their lending rates (to small borrowers) are also higher. Safety: SFB deposits are also covered by DICGC insurance up to ₹5 lakh per depositor per bank — the same protection as PSU and private banks. For balances under ₹5 lakh, an SFB savings account can be a smart, safe choice for higher returns.
Auto-Sweep / Flexi FD — The Smart Savings Hack
Most major banks offer an Auto Sweep or Flexi Deposit facility: when your savings account balance crosses a threshold (say ₹25,000), the excess is automatically swept into an FD earning 6.5–7%. When you spend money, the FD is auto-broken to meet the need. You earn FD rates on your savings balance without any manual effort. This is one of the most underused features in Indian banking.