Savings Account Interest Rates 2024

A Savings Account is one of the most basic financial products that you avail from a bank. It helps you to save, transfer, and withdraw funds while also earning interest on the deposited amount. The biggest advantage of a Savings Account is that it offers the benefit of liquidity, i.e. easy accessibility to your funds, in addition to interest earnings.

Domestic, NRO & NRE Savings Rate

Effective 1^st July, 2023, the interest on your Savings Account has been revised as per the following interest rate structure.

The interest is calculated basis incremental balance slabs upto Rs. 2000 Crs. For balance slabs of Rs. 2000 Crs and above, flat interest pay out would be applicable on the entire amount.

Formula to calculate the Savings Account interest rate

The interest accrued on Savings Accounts is computed daily, considering the closing balance. This interest is then credited to the account semi-annually or quarterly, depending on the type of Savings Account and the bank's policy. We follow the law of simple interest to calculate daily interest for a standard Savings Account.

Here is the formula:
Daily Interest = Daily Balance * (Interest /Days in the year)

Let us suppose the balance of a Savings Account is Rs 5 lakhs on a given day and the savings interest rate is 3% per annum, the calculation would be as follows:

Daily Interest = 5 lakh * (3/100) / 365 = Rs 41.09

Assuming the account maintained a daily balance of Rs 5 lakh for a month. In this case, the total interest earned in the entire month would be:

Monthly Interest = 5 lakh * 30*(3/100) / 365 = Rs 1232.87

TDS on Savings Account Interest

Banks don't apply TDS to the interest accrued in Savings Accounts, as per Section 194A of the Income Tax Act. If the interest amount accrued in a Saving Account exceeds Rs 10,000, it will be subject to taxation at the marginal tax rate applicable to the account holder. The interest earned from a Savings Account is not treated as an exemption but rather as a deduction.

As per Section 80TTA of the Income Tax Act, individuals aged 60 years or younger, as well as Hindu Undivided Families, can enjoy an exemption from tax on interest earned up to Rs. 10,000 in a financial year.

This deduction applies to interest earned from Savings Accounts with banks, co-operative societies engaged in banking activities, or post offices.

What are the benefits of a Savings Account?

1. Earning interest
Using a Savings Account allows you to accrue interest on the funds you deposit. Banks provide interest Savings Accounts along with various perks like discounts on locker rentals and unlimited ATM transactions.

2. Secure investment avenue
A Savings Account offers safe and guaranteed returns. While the interest earned is modest, it can add up to a significant amount if you maintain a high balance in your Savings Account. Simply depositing money into your Savings Account helps to earn nominal interests and keeps your money safe.

3. Minimal initial investment
Maintaining a minimum balance in your account is all that's required to continue earning interest. The specific minimum deposit requirement may vary from one bank to another and also based on the Savings Account variant you hold.

4. Online banking facilities
Axis Bank provides online banking services, streamlining the day-to-day management of bank accounts. Through the Axis Mobile app and Internet banking account, you can seamlessly conduct various transactions such as fund transfers, investing in fixed and recurring deposits, requesting for cheque books, applying for loans or Credit Cards, etc.

5. Facilitates loan acquisition
Holding a Savings Account with a bank can facilitate the process of obtaining a loan, as it establishes a history and relationship with the bank. This history may make it easier to secure a loan from a bank where you already hold a Savings Account.