There are different Bank Accounts available, Savings, Current, Salary Accounts, and Term Deposits. If you are a non-resident Indian, there is an NRI Account for you. Every Bank Account has unique features and benefits. You need to consider your banking requirement to open a suitable account.
Savings Accounts are popular as it offers several banking benefits. The account lets you deposit your money securely and earn a fair interest rate. You can use the account to make seamless transactions, pay utility bills, invest, and apply for Loans. As mentioned, you earn a fair interest rate on your Savings Account deposits. Let us understand how Savings Account interest rates are calculated.
About Savings Account interest rates
Savings Account interest rates are calculated based on the applicable rate. The interest rates differ from one bank to another. You should consider opening an account with a bank offering the highest interest rate to reap maximum benefits. Your account balance also impacts the applicable interest rate. Higher deposits attract a higher interest rate. You need to maintain a higher deposit value. It helps you save a significant amount and earn decent interest.
Savings Account interest rate calculations
Make a note of the following pointers when calculating Savings Account interest rates:
- Leading banks calculate interest earnings regularly. They consider the daily closing balances for calculation. Hence, aim to hold a good account balance at the end of the day.
- The bank decides the applicable interest rate on Savings Account. It is within the Reserve Bank of India framework. Note that the interest rates are revised often. You should check the bank’s website to know the latest interest rates.
- Typically, the bank rounds off your interest earnings to the nearest rupee. The interest earnings are credited to your Bank Account every quarter or as the bank decides.
- The Savings Account interest calculator is an incredible online tool to calculate your interest earnings. You need to enter key variables, and the calculator handles the rest. It offers accurate results within minutes. You can easily access the online calculator on the Banking App.
Savings Account interest rates and taxation
Savings Account interest earnings are taxable. They are taxed as per your income tax slab rate. You need to declare the interest earnings under the ‘income from other sources’ tabs when filling for ITR. You can avail of the following tax deductions on your interest earnings in the following manner:
- You can claim a tax deduction under Section 80 TTA if your annual interest earnings from all deposits do not exceed Rs. 10,000.
- If you are a senior citizen account holder, you can claim a tax deduction of Rs. 50,000 on interest earnings from various deposits. This tax deduction will be over and above Section 80C tax deductions.