Treasury bills in India

What a Treasury bill is

A Treasury bill is a short-term borrowing of the Government of India, issued and auctioned by the Reserve Bank of India on the government's behalf. Because it is a sovereign obligation, there is effectively no credit risk — you will be repaid unless the Government of India itself defaults, which for rupee debt it has never done.

T-bills are zero-coupon instruments. They do not pay interest along the way. Each bill has a face value of ₹100 and is sold at a discount — say ₹98.71 — and at maturity you are paid the full ₹100. The ₹1.29 difference is your return. There are exactly three tenures: 91 days (about three months), 182 days (about six months) and 364 days (just under a year). There is no longer-dated T-bill; anything past a year is a dated Government Security (G-Sec), covered in our guide to government bonds in India.

The RBI auctions T-bills regularly — the 91-day bill is offered every week, and the 182- and 364-day bills on a regular weekly-to-fortnightly cycle set out in RBI's quarterly auction calendar. Retail investors do not need to compete on price: you place a 'non-competitive' bid, and under the RBI/NSE Non-Competitive Bidding scheme you are allotted at the weighted-average price of the competitive bids accepted at that auction — not at the auction cut-off. In practice the two differ only marginally. The minimum investment is ₹10,000 of face value, in multiples of ₹10,000, up to a maximum of ₹2 crore per bid at each auction.

Latest T-bill cut-off yields (mid-2026)

There is no single 'T-bill interest rate' — the yield is set fresh at every weekly auction, so it drifts with money-market conditions and RBI policy. The table below shows the most recent cut-off yields we could verify in mid-2026, each with its date. Treat them as a snapshot, not a locked rate: the number you actually get depends on the auction you bid into.

The approximate discount price shows what you would have paid per ₹100 of face value at that yield — the deeper the discount below ₹100, the higher your return. Notice the curve slopes upward: the longer 364-day bill pays more than the 91-day, which is normal when investors expect rates to hold or the market wants a little extra for locking money up longer.

One clarification on what you actually receive: as a non-competitive bidder you are allotted at the weighted-average price of the competitive bids — normally within a paisa or two of the cut-off shown above — not at the cut-off itself. For the live number before you invest, check the auction results on rbi.org.in (Press Releases) or the results shown inside RBI Retail Direct / your broker at bid time.

How the discount and yield are calculated

Because a T-bill pays no coupon, its 'return' is just the annualised version of the discount you bought it at. The standard formula RBI and brokers use is:

Yield (% p.a.) = [ (Face value − Purchase price) ÷ Purchase price ] × [ 365 ÷ Days to maturity ] × 100.

Worked example. Suppose you buy a 91-day T-bill with ₹10,000 face value at an auction price of ₹9,871 (that is ₹98.71 per ₹100). At maturity, 91 days later, the government pays you back the full ₹10,000. Your profit is ₹129. Plug it in: (129 ÷ 9,871) × (365 ÷ 91) × 100 = 1.307% × 4.011 = about 5.24% a year. The ₹129 looks small because the money is only tied up for three months — the annualised yield is what makes it comparable to an FD rate.

One nuance: the return is fixed the moment you buy, because both your purchase price and the ₹100 redemption are known. Unlike a floating-rate product such as the RBI Floating Rate Savings Bond, nothing about a T-bill's payout changes after you buy it.

How to buy Treasury bills

All three routes below let a retail investor place a non-competitive bid — you don't quote a price, you just say how much you want and are allotted at the weighted-average price of the competitive bids accepted at that auction (typically within a paisa or two of the cut-off). Bills bought this way are held either in a Retail Direct Gilt (RDG) account with the RBI or in your regular demat account, depending on the route.

For a fuller walk-through of demat, KYC and settlement for any bond, see our guide on how to invest in bonds.

• RBI Retail Direct (free, direct from the RBI) — Open a free Retail Direct Gilt (RDG) account at rbiretaildirect.org.in with PAN, Aadhaar, a bank account and mobile/email. There are no account-opening, maintenance or transaction fees; you buy straight from the source and hold the bills in your RDG account. Best for buy-and-hold savers who want zero costs.
• Through a broker (Zerodha, Groww, Upstox) — If you already have a demat account, most brokers let you place T-bill / G-Sec bids from the app, usually at no brokerage on the government-securities segment. That zero cost applies to primary auction bids only — if you sell a T-bill in the secondary market before maturity, normal brokerage and demat charges apply (STT is still not levied on T-bills). The bills land in your existing demat account alongside your shares. Best for people who already trade and want everything in one place.
• Through a bank — Several banks (SBI, HDFC Bank, ICICI Bank and others) offer non-competitive bidding for G-Secs and T-bills via net banking. Convenient if you prefer your bank's interface, though the flow is less streamlined than Retail Direct.
• Selling early — You are not forced to hold to maturity. T-bills can be sold in the secondary market (via Retail Direct's secondary segment or the exchange), but retail secondary liquidity is thin, so you may not get a clean price, and a sale through a broker attracts the usual brokerage and demat charges (though not STT). If you might need the money on a fixed date, just buy the tenure that matches.

How Treasury bills are taxed

T-bills get no special tax treatment — and they are not tax-free. Your gain is the difference between what you paid and the ₹100 face value you receive at maturity, and because the longest T-bill runs only 364 days, that gain is always short-term.

It is treated as a short-term capital gain and taxed at your income-tax slab rate. There is no indexation, no concessional rate, and no Section 80C deduction on the amount you invest. So a 30%-slab investor keeps only about 70% of a T-bill's yield after tax — a ~5.8% gross yield becomes roughly 4% net.

The one small admin plus: there is no TDS deducted on redemption for resident investors. You receive the full ₹100 and self-report the gain in your ITR. That saves lower-income investors the hassle of claiming a refund, but it also means the tax is your responsibility — don't forget to declare it. If in doubt about your own situation, confirm with a tax adviser or the current slab tables on the Income Tax portal.

T-bills vs a fixed deposit for short horizons

This is the comparison most readers actually want, and the honest answer in mid-2026 is uncomfortable for T-bills: on headline rate, a good bank FD usually wins. Top banks were paying roughly 6.25-6.85% on 6-12 month deposits in July 2026, while the 364-day T-bill cut off near 5.8%. Both are taxed the same way — at your slab — so the FD's rate advantage flows straight through after tax.

So why hold T-bills at all? Two reasons. First, safety at scale: a bank FD is only insured up to ₹5 lakh per bank under DICGC, whereas a T-bill is a direct claim on the Government of India with no cap — so for large sums (say ₹10-50 lakh you must keep safe for a few months), the sovereign guarantee matters more than the last half-percent of yield. Second, they are a clean, liquid, tradable instrument you can ladder across 91/182/364-day maturities without breaking anything. For most retail savers with modest amounts inside the deposit-insurance limit, though, a short FD is simpler and pays more today.

If you want a diversified, low-cost debt exposure rather than a single short bill, the Bharat Bond ETF and short-duration debt funds are the usual next step up.