Did you know the current yield-to-maturity of 91, 182 and 364 day T-bills issued by the Reserve Bank of India (RBI) currently stands around 6.8 percent, which exceeds the annual returns offered by most fixed deposit schemes.
But what exactly are T-Bills?
T-Bills are short-term financial instruments traded in the money market, issued by the RBI on behalf of the government. These bills are available in three durations: 91 days, 182 days, and 364 days. T-Bills are sold at a discount to their face value of Rs 100 and are redeemed at face value upon maturity. Consequently, they are also referred to as zero-coupon bonds.
Taxation of T-Bills
Since T-Bills are issued at a discount and redeemed at face value upon maturity, the difference between the discounted issue price and the face value represents the gain for investors. As T-Bills have tenors ranging from 91 to 364 days, any gain realized is considered short-term capital gain.
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