BAJAJ BROKING
May 30, 2025
5 mins read
Treasury Bills, or T-Bills, are short-term government securities that offer a safe way to invest your money for fixed periods. Issued by the Reserve Bank of India (RBI) on behalf of the central government, T-Bills do not offer regular interest. Instead, they’re sold at a discount and redeemed at face value. This means you earn a return based on the difference between the purchase price and the redemption value. You’ll often hear about T-Bills when markets discuss safe havens or short-term liquidity options. They’re popular among conservative investors like you who want capital preservation and predictable returns. Since the Indian government backs them, T-Bills carry virtually no credit risk. These instruments also help you park your idle funds effectively while generating moderate income. With various maturities, ranging from 91 to 364 days, they’re ideal for managing short-term goals and liquidity needs. You can easily invest in them through primary auctions or secondary markets.
A Treasury Bill (T-Bill) is a short-term debt instrument issued by the government to meet its short-term financial requirements. T-Bills are considered risk-free because the government backs them. You buy them at a discounted price and receive the full face value upon maturity. The difference is your return. They’re ideal for people like you looking for safe, short-duration investments. T-Bills are issued with fixed tenures such as 91 days, 182 days, and 364 days. Unlike bonds, T-Bills don’t offer periodic interest. Instead, they are zero-coupon securities. You can buy T-Bills through RBI auctions via banks or online investment platforms. They’re often used by banks, mutual funds, and corporations for managing liquidity. However, even as an individual investor, you can participate and benefit from the reliability and safety of these instruments. For you, this could be a smart way to invest idle funds without taking on significant risk.
In India, T-Bills are issued by the RBI on behalf of the Government of India to meet short-term borrowing needs. When you invest in a T-Bill, you’re essentially lending money to the government for a brief period. These bills come in three maturities—91 days, 182 days, and 364 days—and are sold at a discount. Upon maturity, you receive the full face value. The difference between the purchase price and face value is your earnings. These instruments are non-coupon bearing, meaning you don’t earn interest at intervals. Instead, returns are realised at redemption. You can participate in T-Bill auctions via banks, primary dealers, or RBI’s Retail Direct platform. T-Bills are commonly used by banks and mutual funds, but you, as an individual investor, can also benefit from their liquidity, safety, and predictability. This makes T-Bills an excellent tool for managing your surplus funds or parking money temporarily.
Understanding the different types of T-Bills helps you choose the best fit for your investment horizon. In India, T-Bills come in three standard tenures: 91 days, 182 days, and 364 days. All three follow the same principle—buy at a discount, redeem at face value—but vary in duration and yield.
Yield calculation in T-Bills is straightforward. Since they’re zero-coupon instruments, the yield is derived from the difference between the discounted purchase price and the face value. You can use a simple formula to understand how much you’ll earn from your investment in T-Bills.
Formula:
Yield (%) = [(Face Value – Purchase Price) / Purchase Price] × (365 / Days to Maturity) × 100
Let’s say you buy a 91-day T-Bill with a face value of Rs. 100 at Rs. 98.
Yield = [(100 - 98)/98] × (365/91) × 100 ≈ 8.23% (approx.)
This helps you estimate how much return you’ll get before making the investment.
If you’re planning to invest in T-Bills, it’s important you understand the tax implications. The returns you earn are taxable under ‘Income from Other Sources’ and not exempt from tax. Here’s a breakdown for you:
Before you dive into investing in T-Bills, it’s essential to understand how taxes will apply. Your earnings are taxed based on your income slab.
You can buy Treasury Bills in India through both primary and secondary markets. The process is simple, especially if you use online platforms like RBI’s Retail Direct or demat-based brokers. Whether you're a seasoned investor or just starting out, here’s how you can make your purchase.
In India, purchasing T-Bills is safe, easy, and transparent. Here are your options:
Before investing, it helps to know what makes T-Bills unique. These key features make them attractive if you want a risk-free, short-term option to park surplus funds. Here’s a breakdown to help you decide if they suit your investment goals.
If you value safety and quick returns, T-Bills can be a great addition to your portfolio. They serve as a reliable instrument for managing short-term goals and liquidity. Here are some benefits of investing in T-Bills.
While T-Bills offer safety and liquidity, they might not suit all types of investors. It’s important to weigh the drawbacks so you make a smart and well-informed decision. Here’s what to consider before investing.
You might wonder why T-Bill prices fluctuate. These movements are closely tied to macroeconomic factors and RBI’s monetary policy decisions. Understanding what affects T-Bill pricing helps you time your investments better.
T-Bill prices are influenced by a variety of economic signals. Here's what you should watch:
Let’s say you want to invest in a 91-day T-Bill with a face value of Rs. 1,00,000. You purchase it at Rs. 97,750 in an RBI auction. After 91 days, you receive Rs. 1,00,000 on maturity. Your earning is Rs. 2,250. This Rs. 2,250 is taxed as interest income in your hands. You can use the RBI Retail Direct platform or go through a bank/broker for the purchase. This is how T-Bills offer predictable, risk-free returns for a short duration—ideal for investors like you who prioritise capital safety over high returns.
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T-Bills are short-term debt securities issued by the government at a discount and redeemed at face value. You earn the difference as income.
You buy them at a lower price and receive the full face value at maturity. The return is the difference between both values.
T-Bills mature in 91 days, 182 days, or 364 days—offering short-term flexibility to park your funds safely.
You can buy them via RBI Retail Direct, authorised banks, brokers, or through primary auctions conducted weekly by the RBI.
T-Bills are short-term and offer no interest, while bonds are long-term and pay regular interest (coupons) throughout their tenure.
Yes, they’re backed by the Government of India, making them virtually risk-free and ideal for conservative investors like you.
They are issued at a discount to face value. The difference between the discounted price and redemption amount is your return.
T-Bills don’t carry a fixed interest rate. Returns are derived from the discount offered during issue and vary by market demand.
Yes, individuals like you can easily invest in T-Bills via RBI Retail Direct or through brokers and mutual fund platforms.
Your returns are taxed as income under ‘Income from Other Sources’. There’s no TDS, but the earnings are taxed as per your income slab.
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