From January 9, 2026, IDFC First Bank has reduced interest rates on savings account deposits for domestic, NRE, and NRO accounts.
The change affects small and mid-sized balances the most, with cuts of up to 200 basis points, while rates for very large deposits remain mostly unchanged.
New Savings Account Interest Rates
Here’s the revised interest rate structure:
Up to ₹1 lakh: 3% per annum (unchanged)
Above ₹1 lakh up to ₹10 lakh: 5% per annum
Above ₹10 lakh up to ₹10 crore: 6.5% per annum
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
Previously, balances above ₹5 lakh up to ₹5 crore earned up to 7%, and deposits between ₹5 crore and ₹10 crore earned 6.75%.
With the new structure, the highest rate is now 6.5% for balances above ₹10 lakh and up to ₹10 crore.
This means smaller depositors will see a reduction in interest, while very high balances remain largely unaffected.
How Savings Account Interest Is Calculated
Banks calculate interest based on the daily closing balance using the formula:
Monthly Interest = Daily Closing Balance × Number of Days × Interest Rate ÷ Days in the Year
For example, if your closing balance is ₹5 lakh and the annual interest rate is 5%, your monthly interest would be:
5,00,000 × 30 × (5 ÷ 100) ÷ 365 = ₹2,055
IDFC First Bank credits interest monthly, but some banks may credit interest quarterly or half-yearly, depending on their policies.
Tax Implications
There is no TDS on savings account interest.
However, the interest is considered ‘Income from Other Sources’ and must be declared while filing income tax returns.
Individuals can claim a deduction up to ₹10,000 under Section 80TTA
Senior citizens have a higher deduction limit of ₹50,000 under Section 80TTB
For fixed deposits (FDs) or recurring deposits (RDs), TDS applies if the interest exceeds ₹40,000 in a year (₹50,000 for senior citizens).
