Savings Account Interest Rates in India (Jan 2026)

Domestic, NRO & NRE Savings Rate

Effective 28^thJune 2025, the interest on your Savings Account has been revised as per the following interest rate structure.

Balance Slabs	Applicable Rate of Interest w.e.f. 12 ^st June, 2025
Less than 2000 Cr	2.50%
₹2000 crores and above	Overnight MIBOR + 0.70%

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

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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 ₹5 Lakhs on a given day and the savings interest rate is 2.50% per annum, the calculation would be as follows:

Daily Interest = ₹5 Lakhs * (2.50/100) / 365 = ₹34.24

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

Monthly Interest = ₹5 Lakhs * 30*(2.50/100) / 365 = ₹1027.39

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 ₹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 ₹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?

Earning interest

Using a Savings Account allows you to accrue interest on the funds you deposit. Banks provide interest-bearing Savings Accounts along with various perks like discounts.

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.

Minimal initial investment

Maintaining a minimum balance in your account is all that's required to continue earning interest.

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.

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.

Frequently Asked Questions

The interest rate is calculated on the balance maintained in the Savings Account on a daily basis, but it is credited to the account on a quarterly basis (on the first day of the next quarter with the exception of the fourth quarter where the interest amount is paid on the last day of the quarter).

There is no time limit or maturity period for a Savings Account. You will earn interest as long as you maintain funds in the account. Please remember, however, that some Savings Account may require you to maintain a minimum balance. This requirement may differ basis the type of Savings Account you hold and also on whether your Bank branch is in an urban, rural or semi-urban location.

You can earn an interest of 2.50% on your daily current balance of your Savings Account at Axis Bank.