Why the New Tax Regime Means Even Bank Interest—and Your Rupee—Gets Taxed Today

1. 📉 What Changed: No More Interest Exemption

Under the old tax regime, you could claim a deduction of up to ₹10,000 on interest earned from savings accounts under Section 80TTA (or ₹50,000 under 80TTB for senior citizens).

But with the New Tax Regime (Section 115BAC), all these deductions are gone.
No matter how small, every rupee of interest you earn is now added to your taxable income.

This includes:

• Savings account interest

• Fixed deposit interest

• Recurring deposit interest

Result? Even keeping money in the bank is now creating taxable income for you.

2. 💸 Let’s Break It Down with a Simple Example

Imagine you keep ₹3 lakhs in your savings account.

Your bank gives you 3% annual interest → That’s ₹9,000 a year.
Under the old regime, you wouldn’t have paid tax on it (thanks to 80TTA).
Under the new regime, this ₹9,000 gets taxed at your slab rate.

Now imagine you’ve got:

• ₹5 lakhs in a fixed deposit → ₹30,000 in annual interest

• ₹1 lakh in emergency funds → ₹3,000 more in interest

That’s ₹42,000 of additional taxable income, just by keeping money in the bank.
Tax on that could be as high as ₹13,000, depending on your slab.

So yes—every single rupee sitting quietly in your bank is making you pay more taxes.

3. 🧾 Bottom Line: Even Safe Money Isn’t Tax-Free

The new tax regime may look simpler on paper, but it silently taxes things you didn’t think about—like your interest income from banks. With no Section 80TTA deduction, even the ₹1 earned from your savings is now taxable.

So next time you say, “My money is safe in the bank,”
remember—it’s safe, but it’s also taxed.