Savings Bank Interest Calculator (2026)

Calculate exactly how much interest your bank will credit to your account based on your average daily balance, including 80TTA tax exemptions.

Daily Balance Math 80TTA Tax Free limit

Account Details

₹
%

Major PSU banks offer ~2.7%. Private banks offer 3% to 7%.

Mths

Your Tax Profile

Total Net Interest Earned

₹0

Pre-Tax Gross Interest

₹0

Tax to Pay (ITR)

₹0

Tax Breakdown

80TTA Tax-Free Exemption - ₹0
Taxable Interest Amount ₹0

*Note: Banks do not deduct TDS on savings accounts. Any tax payable on amounts exceeding your exemption limit must be paid by you during ITR filing.

How Does Savings Account Interest Work?

As per the Reserve Bank of India (RBI) guidelines introduced in 2010, the interest on a savings bank account must be calculated on a daily basis based on the closing balance in the account. Prior to this, banks used to calculate interest on the minimum balance maintained between the 10th and the last day of the month.

While the calculation happens daily, banks generally credit this accumulated interest into your account on a quarterly or half-yearly basis.

Understanding Tax Exemption: Section 80TTA vs 80TTB

Savings account interest is not entirely tax-free, but the government provides significant exemptions to protect small savers:

Why You Shouldn't Keep Too Much in Savings

Most major banks in India offer between 2.7% and 3.0% on savings accounts. Because inflation in India historically averages around 5% to 6%, money sitting idle in a savings account is actually losing purchasing power over time. It is highly recommended to only keep a small emergency fund in your savings account and move the rest to investments that beat inflation.

Simplified Formula = Average Balance × (Interest Rate / 100) × (Months / 12)

Key Characteristics & Comparison Overview

Feature / Parameter Details / Rules Tax Implications
Primary Returns Guaranteed / Market-Linked Growth Taxable at Income Tax Slab Rates
Compounding / Payout Quarterly / Annual Compounding TDS deductions applicable where threshold met
Lock-in & Liquidity Specified Tenure / Market Liquidity Premature withdrawal penalties apply

Frequently Asked Questions

How is savings account interest calculated in India?
As per RBI guidelines, interest on savings bank accounts is calculated on a daily basis on the closing balance in the account. However, the interest is typically credited to your account on a quarterly or half-yearly basis depending on the bank.
Is savings account interest taxable?
Yes, it is taxable under the head 'Income from Other Sources'. However, Section 80TTA provides a deduction of up to ₹10,000 per financial year for individuals under 60 years of age.
What is Section 80TTA?
Section 80TTA allows regular taxpayers to claim a deduction of up to ₹10,000 on interest earned specifically from savings accounts (banks, post office, cooperative societies). Fixed deposit interest does NOT qualify for 80TTA.
Do senior citizens get a higher exemption on savings interest?
Yes, under Section 80TTB, senior citizens (aged 60 and above) can claim a deduction of up to ₹50,000 per financial year on interest earned from all deposits (including both savings accounts and fixed deposits).
Does the bank deduct TDS on savings account interest?
No, unlike Fixed Deposits, banks do NOT deduct TDS on savings account interest. However, you are still required to declare it in your ITR and pay tax if the interest exceeds the 80TTA/80TTB limits.
What is a good average balance to maintain?
It is generally advised to keep only 3 to 6 months of emergency funds in a savings account. Any excess cash should be moved to sweep-in FDs, liquid mutual funds, or other investments to earn better returns.
Is savings bank interest subject to TDS in India?
No, banks do not deduct TDS on savings account interest income under Section 194A, but you must report it in your Income Tax Return under Other Sources.
How is average daily balance calculated for savings interest?
Interest is calculated on the closing balance of your savings account at the end of each day and credited quarterly or half-yearly by your bank.