From January 9, 2026, IDFC First Bank has reduced interest rates on savings account deposits for domestic, NRE, and NRO accounts.
Small and mid-sized depositors will see cuts of up to 200 basis points, while rates for very large balances remain mostly unchanged.
New Interest Rate Structure
The revised savings account interest rates are as follows:
Up to ₹1 lakh: 3% per annum (unchanged)
Above ₹1 lakh up to ₹10 lakh: 5% per annum (reduced)
Above ₹10 lakh up to ₹10 crore: 6.5% per annum (capped)
Above ₹10 crore up to ₹25 crore: 6% per annum
Above ₹25 crore up to ₹100 crore: 5% per annum
Above ₹100 crore: 4% per annum
Earlier, balances between ₹5 lakh and ₹5 crore earned up to 7%, while deposits between ₹5 crore and ₹10 crore earned 6.75%.
The latest revision clearly reduces returns for smaller depositors, while higher balances remain mostly stable.
How to Calculate Savings Account Interest
Banks calculate savings account interest using the following formula:
Monthly interest = Daily Closing Balance × Number of Days × Interest Rate ÷ 365
Example: If your account balance is ₹5 lakh and the interest rate is 5%:
Monthly interest = 5,00,000 × 30 × (5/100) ÷ 365 = ₹2,055
Interest is calculated daily based on the closing balance and is credited either quarterly, half-yearly, or monthly, depending on the bank’s policies.
IDFC First Bank credits interest monthly, giving depositors faster access to their earnings.
Taxation on Savings Account Interest
Interest earned on savings accounts is taxable under ‘Income from Other Sources’, but no TDS is deducted.
Individuals can claim a deduction of up to ₹10,000 under Section 80TTA.
Senior citizens can claim up to ₹50,000 under Section 80TTB.
For fixed deposits (FDs) or recurring deposits (RDs), TDS applies if interest exceeds ₹40,000 per year (₹50,000 for senior citizens).
