Short-term government debt. Zero-coupon, sold at discount. 6.5-7% yield. Zero credit risk. RBI Retail Direct. ₹10K minimum. Safest short-term parking. Slab tax.
T-BILLS = short-term GOVERNMENT debt instruments. ZERO-COUPON (no interest) — sold at DISCOUNT, redeemed at FACE VALUE. TENURES: (1) 91-DAY. (2) 182-DAY. (3) 364-DAY. KEY: (1) ZERO CREDIT RISK (government-backed). (2) 6.5-7% effective yield. (3) Min ₹10,000. (4) Buy via RBI Retail Direct. (5) Weekly auctions. EXAMPLE: buy 91-day T-bill at ₹98,300, redeem at ₹1,00,000. Return ₹1,700 (~7% annualized). STRATEGIC: safest short-term parking.
T-BILL DISCOUNT: (1) FACE VALUE ₹100 (or ₹1L). (2) Sold at DISCOUNT (e.g., ₹98.30). (3) Redeemed at FACE VALUE ₹100. (4) DIFFERENCE = return. EXAMPLE: 182-day T-bill. (a) Buy at ₹96.50. (b) Redeem at ₹100. (c) Return ₹3.50 over 182 days. (d) Annualized ~7.2%. NO periodic interest (zero-coupon). STRATEGIC: known return at maturity. Predictable + safe. Yield varies with RBI policy rates.
T-BILL TAX: (1) DISCOUNT (return) = treated as SHORT-TERM CAPITAL GAIN or interest income. (2) TAXABLE at SLAB RATE. (3) Held under 1 year (all T-bills are < 1 year): STCG/income. (4) NO LTCG benefit (short tenure). (5) NO TDS (RBI Retail Direct). EXAMPLE: ₹2K return on T-bill, 30% slab = ₹600 tax. STRATEGIC: tax-inefficient for high earners (slab rate). Similar to FD interest taxation. Use for safety + liquidity, not tax efficiency.
SHORT-TERM COMPARISON: (1) T-BILLS: 6.5-7%, zero credit risk, fixed tenure (91-364 days), slab tax. (2) LIQUID MF: 6-7%, low risk, T+1 redemption, slab tax. (3) FD: 6.5-7.5%, bank risk (insured ₹5L), penalty on early exit, slab tax. (4) SAVINGS: 3-4%, instant. STRATEGIC: (a) T-bills: safest (government), fixed tenure. (b) Liquid MF: most flexible. (c) FD: highest rate but lock-in. (d) For ZERO-RISK short-term: T-bills win. Match tenure to need (91/182/364 day).
T-BILL STRATEGY: (1) ZERO-RISK short-term parking (emergency buffer, near-term goals). (2) RBI RETAIL DIRECT account (free). (3) MATCH tenure to need (91/182/364 day). (4) LADDER: stagger maturities for rolling liquidity. (5) 6.5-7% government-backed yield. (6) SLAB TAX — less efficient for high earners. (7) MIN ₹10K, multiples thereof. (8) WEEKLY auctions (91-day weekly, 182/364 fortnightly). (9) SECONDARY market exit possible (NDS-OM). (10) COMPARE to liquid MF (more flexible) + FD (higher rate, lock-in). STRATEGIC: T-bills for ultra-safe short-term government exposure. Ideal for risk-averse + treasury management. CONSULT for large allocations.