How is Savings Account interest calculated in India?

As per RBI guidelines, interest on savings accounts is calculated on a daily product basis (daily closing balance) but is credited to the account at quarterly intervals (typically June, Sept, Dec, March).

What is the tax exemption limit for Savings Interest?

For general citizens (under 60), up to ₹10,000 of interest is tax-free under Section 80TTA. For Senior Citizens (over 60), the limit is ₹50,000 under Section 80TTB.

Is interest credited monthly or quarterly?

Most banks in India, including SBI, HDFC, and ICICI, credit savings bank interest quarterly. Some banks may credit it monthly, but quarterly is the industry standard.

Savings Account Calculator India – Interest & Tax (80TTA)

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Savings Account Interest Calculator

Calculate quarterly compounded interest and tax liability (80TTA).

Initial Balance (₹) ₹100000

opening balance

Monthly Savings (Optional) ₹0

added monthly

Duration (Years) 1 Year

Interest Rate (% p.a.) 3.5%

*Typical Savings Rates: SBI/HDFC (3%), Small Finance Banks (up to 7%)

Tax Liability on Interest

Total Interest Earned: ₹0

Deduction (80TTA): ₹10,000

Taxable Interest Income: ₹0

*Add this amount to your taxable income.

Maturity Balance
₹0

Total Deposits

₹0

Total Interest

₹0

Note: Interest is calculated daily but credited to your account Quarterly (every 3 months) as per RBI norms.

Did you know? Unlike Fixed Deposits (FDs), savings account interest is calculated on your daily closing balance. This calculator estimates returns using quarterly compounding, which matches the crediting cycle of most Indian banks.

How Savings Account Interest Works

While we often ignore the pennies, savings account interest can add up. The Reserve Bank of India (RBI) mandates that interest must be calculated on a daily basis and credited at quarterly intervals (usually June, September, December, and March).

Tax Rules: Section 80TTA vs 80TTB

Interest earned from savings accounts is not entirely tax-free, but you get significant deductions:

Category	Section	Max Deduction	Eligibility
General Citizen	80TTA	₹10,000	Age < 60 Years
Senior Citizen	80TTB	₹50,000	Age >= 60 Years

Note: The deduction under 80TTB for seniors covers interest from both Savings Accounts and Fixed Deposits, whereas 80TTA is strictly for Savings Accounts.

Savings vs Liquid Funds vs FDs

If you have idle cash, you might consider other parking spots. Here is a quick comparison:

Savings Account: 3-4% returns. Highest liquidity. Calculate here.
Fixed Deposit (FD): 6-7% returns. Locked for fixed tenure. Check PPF/FD alternatives.
Liquid Mutual Funds: 6.5-7% returns. High liquidity but taxation varies.

Why Small Finance Banks offer Higher Rates?

You might notice banks like AU Small Finance, Equitas, or Ujjivan offering 7% on savings accounts. This is because they are newer and need to attract deposits. Your money is insured up to ₹5 Lakh by DICGC in these banks, just like in HDFC or SBI.