Tax on Treasury Bills

Taxation
1

Hi Team,

I bought Treasury bills in January for 182 days in January, 2025 and earned interest 20 k.

It will expire in July, 2025 different financial year.

Please let me know which financial year I need to show these interest income? And under which head I need to show?

2

  • T-bills: T-bills are bought at a discount and sold at par. The appreciation is considered as STCG and taxed as per the applicable slab rate.

    Remember that Treasury bills do not pay interest payments and are instead sold at their face value, where you receive the full face amount when the T-bill matures.

    The income earned from Treasury Bills should be reported under the head “Income from Other Sources” while filing your Income Tax Return (ITR).

    As per your example:- The income of ₹20,000 will be taxed in Financial Year 2025-26 (April 2025 to March 2026), as the maturity will happen in July 2025.

    Click here for more

3

Ummm… since it is STCG, shouldn’t it be somewhere under Schedule-CG ? :thinking:
(perhaps Section 5.a.c.ii - Full value of consideration in respect of assets other than unquoted shares?)

4

Hey @cvs

  • If you held the Treasury Bills to maturity, report the income as interest under “Income from Other Sources”

  • If you traded them in the secondary market before maturity, any resulting gain or loss would be reported under Schedule CG as Short-Term Capital Gains.

    Can verify this with the tax advisor once

5

Thank you for the clarification.

There have been a couple of threads in the past that covered this topic - [1] [2].
But, they ended without any references to first-hand information.
(eg. relevant section of the IT-act or circular/notification).

Knowing this for certain could help simplify ITR-filing for some.
(eg. folks with no other capital-gain income can stick to ITR-1).

While everyone agrees that the rate of tax on T-Bills, is as per one’s tax-slab,
the opinion is split on which of these 2 sections in the ITR (Schedule OS/CG) should one report the income.

@harshareddy do you have any first-hand references for this?
(eg. relevant section of the IT-act or circular/notification).
or is this based on opinions of experts CAs and what you have observed in-practice?
(just curious if we can put this topic to rest with an official confirmation)

6

I would appreciate if you could give a definitive answer here in which section to report the income.

All you did was summarise the question and ended it with same question.

Your help is much valued.

7

As i mentioned above, there is no consensus on this.

Not really @thisisbanerjee.
I was trying to highlight that AFAIK, there is no consensus regarding just one of the points.
The rest are already clarified by harshareddy - Year of taxation (FY-2025-26), and rate of taxation (slab-rate).

Will be useful to finally have a first-hand official reference (not just hearsay)
for the proper ITR schedule(s) to disclose income from T-Bills.

Hyperbole/sarcasm like this, isn’t. :slightly_smiling_face:

But, hey atleast asked and got the misunderstanding clarified. :+1: