IDFC First Bank Interest On Savings Account: From January 09, IDFC First Bank has cut interest rates on savings account deposits across several balance slabs for domestic, NRE and NRO. This change results
in an interest rate cut of up to 200 basis points for small and mid-sized savings balances, depending on the slab.
For higher balances, the bank has largely kept rates unchanged at the top end. Deposits above Rs 10 crore and up to Rs 25 crore continue to earn 6%, balances above Rs 25 crore and up to Rs 100 crore earn 5%, while amounts exceeding Rs 100 crore remain at 4%.
Earlier, savings balances above Rs 5 lakh and up to Rs 5 crore earned interest of up to 7%, while deposits between Rs 5 crore and Rs 10 crore earned 6.75%. Under the revised structure, returns in these segments have been cut, with the highest savings rate now capped at 6.5% for balances above Rs 10 lakh and up to Rs 10 crore.
As per the new rates, balances of up to Rs 1 lakh remain unchanged at 3% per annum. However, deposits above Rs 1 lakh and up to Rs 10 lakh will now earn 5%, reflecting a clear reduction in interest for smaller depositors compared with the earlier structure.
| Savings Account Balance (Rupees) | Rate of Interest (% p.a., Progressive) |
| Up to ₹1 lac | 3.00% |
| Above ₹1 lac up to ₹10 lacs | 5.00% |
| Above ₹10 lacs up to ₹10 crores | 6.50% |
| Above ₹10 crores up to ₹25 crores | 6.00% |
| Above ₹25 crores up to ₹100 crores | 5.00% |
| Above ₹100 crores | 4.00% |
How to Calculate Savings Account Interest Rate
Here is the formula that banks generally follow for calculating the savings account interest rate:
Monthly interest = Daily Closing Balance x (Number of days) x Interest / (Days in the year)
Let’s understand this with an example. For instance, the closing balance in your bank account is Rs 5 lakh, with an annual interest rate of 5%. Thus:
Monthly interest = 5,00,000 x 30 x (5/100) / 365 = Rs 2,055
As per the latest RBI rules, savings account interest rates are calculated daily based on your closing account balance. However, the interest that you earn on your savings account is credited to your account on a quarterly or half-yearly basis, depending upon the type of savings account and the bank’s policies.
IDFC First Bank offers monthly interest credits i.e. the interest on your Savings Account is credited on a monthly basis.
There is no TDS on the interest that you earn through your savings account. However, the interest earned on your savings account is considered as ‘Income from Other Sources’ and is taxable, based on your total earnings. Thus, it is important to declare the interest earned through your savings account while filing income tax returns. Individuals can claim a deduction of up to Rs 10,000 under Section 80TTA for interest earned through Savings Account. For senior citizens, this deduction limit is extended up to Rs 50,000, under Section 80TTB.
On the other hand, TDS does apply to interest earned through fixed deposits (FDs) or recurring deposits (RDs) once the interest earned exceeds Rs 40,000 in a financial year (Rs 50,000 for senior citizens).
