a saving account There is no time restriction or maturity period. As long as you keep the money in the account, you will receive interest, But keep in mind that some savings accounts may require you to maintain a minimum balance. A savings account is required to do any financial transaction.

Different banks offer different Rate of interest On the basis of deposit amount.

and offer 3% interest on balance below Rs 50 lakh and 3.5 per cent on balance above Rs 50 lakh.

How many of us know how to calculate real interest on savings account?

Here’s a simple explanation. However, note that you will need to check with your bank to know the interest calculation.

How to Calculate Interest on Savings Account

RBI regulation states that Rate of interest Determined daily based on your closing balance on your savings account. Your bank will credit your account with accrued interest on a half-yearly or quarterly basis depending on the type of your savings account and the policy of the bank. The Reserve Bank of India (RBI) has urged financial institutions to deposit interest on savings accounts on a quarterly basis as it encourages users to save more money.

How to calculate savings interest rate is generally explained using the formula below. Banks also determine interest on savings accounts in the following manner:

If the daily amount is Rs 3 lakh and the interest rate on the savings account is 4% per annum, then the calculation will be:

Monthly interest = Daily balance * (number of days) * Interest / (days in year)

3 lakh*30*(4/100) / 365 = Rs 986 per month in interest

• Daily Balance: 3 Lakh
• Number of days: 30
• Interest: 4%
• Days in the Year: 365

According to HDFC Bank’s website, “Savings Bank interest will be calculated on the daily balance in your account. Savings Bank interest will be paid at quarterly intervals.”

How to calculate taxes on interest on savings accounts?

Income from a savings account is referred to as “income from other sources.” A tax return has to be filed for this interest. Meanwhile, Section 194A of the IT Act states that TDS is not levied on a savings account.

According to the IDFC First Bank website, “Interest earned on this type of savings account that exceeds ₹10,000 is taxed at the account holder’s marginal tax rate. It is also worth noting that savings account interest is a deduction, not an exclusion. Discount is available only for interest income 10,000, and the savings account should be maintained with a recognized public or commercial bank or post office.