Savings Account Interest Calculator

A savings bank account is the foundation of day-to-day liquidity, handling emergency reserves, incoming salary credits, and routine household spending. However, the interest earned on savings balances is often misunderstood. Since 2010, the Reserve Bank of India (RBI) mandates that all commercial banks calculate savings account interest on a daily end-of-day balance basis, with interest credited quarterly.

The FinToolkit Savings Account Interest Calculator computes your exact quarterly interest earnings, projected balance accumulation, and tax deductions available under Section 80TTA / 80TTB.

How daily balance savings interest is calculated

Under RBI regulations, interest is computed daily and credited every calendar quarter:

Because interest is credited every quarter, savings accounts compound quarterly, slightly boosting your effective annual yield.

Worked calculation example

Consider maintaining an average balance of ₹2,00,000 in a savings account earning 3.50% interest per annum over a 12-month period across 4 quarters (no additional monthly deposits):

Over 12 months, maintaining a ₹2,00,000 balance earns ₹7,092 in interest, resulting in a final closing balance of ₹2,07,092.

Tax rules on savings interest: Section 80TTA vs 80TTB

• Section 80TTA (Regular Individuals under 60): Up to ₹10,000 of cumulative interest earned from savings bank accounts (and post office savings accounts) is completely tax-free under the Old Tax Regime. Any interest exceeding ₹10,000 is added to your income and taxed at your applicable slab rate.
• Section 80TTB (Senior Citizens aged 60+): Resident senior citizens can claim a deduction of up to ₹50,000 across all deposit interest (including savings accounts, bank fixed deposits, and recurring deposits) under the Old Tax Regime.
• New Tax Regime: Section 80TTA and 80TTB deductions are not available under the default new tax regime (Section 115BAC).

Frequently asked questions

Do banks deduct TDS on savings account interest?

No. Unlike fixed deposits, commercial banks do not deduct TDS (Tax Deducted at Source) on savings account interest, regardless of the amount earned. However, you are still legally required to declare total savings interest under "Income from Other Sources" in your annual ITR.

What is an Auto-Sweep (Sweep-in) facility?

An auto-sweep facility automatically transfers surplus funds above a chosen threshold (e.g. ₹25,000) from your savings account into a linked short-term fixed deposit. The surplus earns higher FD rates (6% to 7%) while remaining completely liquid—if you write a cheque or withdraw cash, the FD automatically breaks to cover the deficit without penalty.

How safe is my money in an Indian savings account?

Deposits across commercial and cooperative banks in India are insured up to ₹5,00,000 per depositor per bank (covering principal and accrued interest) by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI.

Related cash management tools

• Fixed Deposit Calculator — compare savings account returns against fixed term deposit yields.
• Emergency Fund Calculator — determine how much liquid cash to keep in your savings account.
• Inflation Calculator — see why surplus funds beyond emergency reserves should be invested to beat inflation.