Salary Account – Definition & Key Differences

What is a Salary Account?

A Salary Account is a type of bank account where your monthly salary is directly credited by your employer. It offers easy access to your money and includes benefits like zero balance and free banking services.

Updated On - 04 Oct 2025
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Salary Account

 Here are more details about the Salary Account:

salary bank account is one of the few things that employees receive from their employers for credit of monthly salary. Employees need to submit the duly filled application form along with other documents to the bank through an employer to open a salary account. These accounts simplify the process of depositing the monthly salary and offer multiple benefits and services.   

The following are the features and benefits of a Salary Account: 

  1. Debit Card and Personalized Cheque Book: These accounts provide the employees or the customers with personalised cheque books for cheque payments. Employees are also provided with debit and credit cards for cash withdrawal and online or offline payments through debit cards. 
  2. Online and Phone Banking facility: These accounts come with phone and online banking services that allows accountholders to transfer funds and perform other banking activities from anywhere across the world. 
  3. Zero minimum balance requirement: These accounts offer flexibility to the accountholders to maintain zero balance in their account without paying any penalty, thereby enabling them to manage their funds effortlessly. 
  1. Various investment options: Employees or customers can also avail themselves of various investment options, such as government bonds, insurancemutual funds, and many more. Employees can also invest in stock trading and investments by linking their demat account to the salary account. 
  2. Instant and easy access to loans: Employees can also get instant and easy access to any type of loan, such as personal loan, home loan, or car loan, with easy and faster documentation procedures. 

Difference Between Salary Account and Savings Account:

The following are some of the primary differences between a salary account and a savings account: 

 Particular

Salary Account 

Savings Account 

Main purpose 

Credit of monthly salary 

For savings of salary or fund 

Who can open 

Only an employer 

Any eligible individual 

Minimum balance requirement 

Zero balance 

Minimum balance should be maintained on monthly or quarterly basis 

Benefits 

Offered to accountholders 

Comes with a minimum fee attached to it 

FAQs on Salary Account

  • Which bank is best for salary account?

    There are multiple banks that offers salary account facility, some of the top salary accounts are IDFC First salary account, ICICI Bank salary account, Axis Bank salary account, Bank of Baroda salary account, PNB My Salary Account SBI Salary Account, etc.

  • Is there any benefit of salary account?

    Yes, there are multiple benefits of salary account, such as debit and credit cards, net banking facility, online fund transfer, demat account, zero balance, free cheque book and passbook, utility bill payment, etc. 

  • What are the rules of salary account?

    Salary account is one type of savings account, and the rules of these accounts are that it can be opened by a business entity or employers where salary is credited on monthly basis. 

  • Who can open salary account?

    Employers or a business entity can open salary account with a bank. In some cases, an individual can also open a salary account only after providing essential documents, such as employment proof from the company and others. 

  • Can I use salary account for personal use?

    Yes, you can use your salary account for personal use, such as online fund transfer, deposit cash or cheque, withdraw funds, etc., apart from credit of monthly salary. 

  • Is salary account tax free?

    No, salary account is not tax free. The employer deducts the tax from your salary and pays it to the Income Tax Department and the total salary is credited to your account. In case the total interest earned on the savings of your salary account exceeds Rs.10,000, then tax would be deducted by the IT Department as per applicable rates. 

  • What is the minimum balance in a salary account?

    There is no minimum balance requirement for maintaining salary account. Accountholder are offered with zero-balance facility on their salary account. 

  • Can I deposit Rs.5 lakh in my salary account?

    Yes, you can deposit Rs.5 lakh in your salary account as per the guidelines set by the Reserve Bank of India (RBI) that allows deposit of Rs.10 lakh annually. Any amount above this threshold limit will be scanned by the Income Tax Department and will be taxed as per the applicable rates. 

  • How much amount in bank is tax free?

    Interest credited in your bank account of up to Rs.10,000 earned from all your savings account is tax free, under Section 80TTA of the Income Tax Act. 

  • Is there any interest applicable to the savings in the salary account?

    No, there is no interest applicable to the savings in the salary account, as the account is opened by the employer for the credit of monthly salary only. 

  • Can I convert my savings account to a salary account?

    Yes, the savings account can be converted to a salary account, if the bank in which the individual has his or her savings account permits them to convert the savings account to salary account.

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