highlights
There is a minimum investment of Rs. 25,000 in Treasury Bills to be made.
Investing in T-Bills requires a Demat account.
Treasury bill yields are typically higher than FDs.
New Delhi. Everyone wants to invest their money in a place where they can get good returns and at the same time their money is safe. As priority is given to safety of money, there is a stronger trend towards fixed deposit (FD) in our country. However, there are some investment options that offer higher returns than FDs, but also carry higher risk. If you want to earn more interest than FD in the short term, investing in treasury bills is the best option for you. The risk of losing money with them is also low. The Reserve Bank of India issues Treasury Notes every week. In the past, only banks or large financial institutions could invest in long-term bonds and Treasury bills (T-bills). But now private investors can also invest in them.
If the Indian government also needs money for development work, it goes to the Reserve Bank of India. The RBI auctions off this government debt in the form of bonds or Treasury bills. You can also buy it individually. That way, with the loan that the government is taking out, you are also giving part of that loan to the government. Fixed interest is paid for this and the principal is also repaid by the state at the agreed time. The debt that the government repays within a year is called the Treasury Bill or T-Bill.
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Three types of treasury bills
There are three types of treasury bills – 91 day, 182 day and 364 day. T-Bills are issued at a discount to their original face value. At maturity, the investor receives the actual value. If the original price of a 91-day T-bill is Rs. 100 and the investor receives it at a discount of Rs. 97, he will get Rs. 100 back at maturity in 91 days. This way he will make a profit of 3 rupees. There is a minimum investment of Rs. 25,000 in Treasury Bills to be made.
Money will go into the account
A Demat account is also required for investing in treasury bills. At maturity, the government debits the treasury bill from the investor’s demat account. This is known as security extinction. The actual value of the T-bill will be credited to the bank account linked to the investor’s demat account. Typically, the return on a 91-day T-bill is between 6% and 7.5%. By May 31, 2023, a return of 6.9 percent was achieved. There is no tax exemption for income from T-Bill. Income from Treasury bills is considered short-term capital gains. The investor has to pay income tax on this according to his tax rate.
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FIRST RELEASED : Jun 02, 2023 11:53 am
