Zerodha T-Bill

T-Bill allotment less than Rs 100 face value

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T-Bills are zero-coupon instruments issued at a discount and redeemed at face value (Rs 100). The discount is your return.

Example

  • Face value: Rs 100.
  • Issue (allotment) price: Rs 98.50.
  • Tenor: 91 days.
  • Discount: Rs 1.50.

At maturity (T+91 days), you receive Rs 100. Your return is Rs 1.50 on a Rs 98.50 investment = 1.52% per 91 days = ~6.10% annualised yield.

Why Rs 98.50 not Rs 100?

T-Bills don’t pay coupon. Instead, the auction sets the discount that produces the prevailing market yield.

Console display

Console shows:

  • Allotted face value: Rs 100 per unit.
  • Cost / paid: Rs 98.50 per unit.
  • Maturity proceeds: Rs 100 per unit.

Tax treatment

The Rs 1.50 gain is treated similar to interest income (taxed at slab rate) for T-Bills.

See also

External references

References

  1. RBI, Treasury Bills, rbi.org.in.
  2. Zerodha, T-Bill mechanics, support.zerodha.com.

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