Treasury Bills

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Mutual fund houses load up on government securities and treasury bills

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	When the government goes to the financial market to raise money, it does so by issuing two types of debt instruments &mdash; treasury bills and government bonds. Treasury bills are issued when the government needs money for a short period. These bills are issued only by the central government, and the interest on them is determined by market forces.</div>
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	<strong>What are maturity period of treasury bills?</strong></div>
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	Treasury bills, or T-bills, have a maximum maturity period of 364 days. So, they are categorised as money market instruments (money market deals with funds with a maturity of less than one year). At present, treasury bills are issued in three maturities &mdash; 91-day, 182-day and 364-day. In 1997 the government also issued 14-day immediate treasury bills.</div>
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	<strong>When were treasury bills introduced? Who issues treasury bills and who can buy?</strong></div>
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	Treasury bills were first issued in India in 1917. They are issued via auctions conducted by the Reserve Bank of India (RBI) at regular intervals. Individuals, trusts, institutions and banks can purchase T-Bills. But they are usually held by financial institutions. They have a very important role in the financial market beyond investment instruments. Banks give treasury bills to the RBI to get money under repo. Similarly, they can also keep it to fulfil their Statutory Liquid Ratio (SLR) requirements.</div>
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	<strong>How do T-bills work?</strong></div>
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	Treasury bills are issued at a discount to original value and the buyer gets the original value upon maturity. For example, a Rs 100 treasury bill can be availed of at Rs 95, but the buyer is paid Rs 100 on the maturity date. The return on treasury bill depends on liquidity position in the economy. When there is a liquidity crisis, the returns are higher, and vice versa.</div>
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	<strong>Are T-bills a safe investment instrument?</strong></div>
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	Treasury bills have an advantage over other market instruments because of the zero-risk weightage associated with them. The secondary market of T-Bills is very active and they have a higher degree of tradability.</div>

RELATED BUDGET TERMS

Learn what are Treasury Bills, Treasury Bills Definition and more Treasury Bills news here at Business Standard.

What are Treasury Bills, T-Bills, Budget News, Treasury Bills Definition

What are Treasury Bills?

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	Securities transaction tax (STT) is a tax levied at the time of purchase and sale of securities listed on stock exchanges in India. STT is governed by the Securities Transaction Tax Act (STT Act). Taxable securities include equity, derivatives, unit of equity-oriented mutual funds, unlisted shares sold under an offer for sale to the public included in initial public offering (IPO) and where such shares are subsequently listed in stock exchanges.</div>
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	<strong>Introduction of STT</strong></div>
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	This tax was introduced in Union Budget 2004 and came into effect from October 1, 2004. The aim behind the introduction of STT was curbing evasion of capital gains tax on profits earned by transacting in securities.</div>
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	<strong>What is STT rate? How is STT calculated?</strong></div>
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	The rate of STT is decided by the govt and it is similar to a tax paid at the source. The provisions of collection of STT work in a manner as tax deducted at source (TDS). STT is collected by a recognised stock exchange or lead merchant banker in case of an IPO. The rate of STT differs based on the type of security traded and whether the transaction is a purchase or a sale. For example, while buying an equity share, both the purchaser and the seller have to pay 0.1 per cent of the share value as STT.<br />
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	<table border="1" cellpadding="1" cellspacing="1" style="width: 500px">
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					<span style="color:#800000;"><strong>Taxable securities transaction</strong></span></td>
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					<span style="color:#800000;"><strong>Rate of taxation</strong></span></td>
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					<span style="color:#800000;"><strong>Payable by</strong></span></td>
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					Sale of an option in securities</td>
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					0.017%</td>
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					Sale of an option in securities, where option is exercised</td>
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					0.125%</td>
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					Sale of a futures in securities</td>
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					0.01%</td>
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					Seller</td>
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	</table>
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Learn what is Securities transaction tax, Securities transaction tax Definition, What is STT rate and more Securities transaction tax news at Business Standard.

What is Securities transaction tax, What is STT, What is STT rate, Securities transaction tax Definition

Securities Transaction Tax (STT)

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	Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types &mdash; non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.</div>
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	Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.</div>
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	Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country&#39;s output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy&#39;s resources.</div>
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	Taxes collected from both direct tax and indirect tax are the government&rsquo;s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.</div>
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	Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax and property tax are some examples of direct tax. Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government&rsquo;s tax revenue.</div>
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Learn what is Tax revenue, Tax revenue Definition, Tax revenue News and more here at Business Standard.

Page 4 - Latest Updates on Treasury Bills

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Mutual fund houses load up on government securities and treasury bills

Ad hoc T-bills, anyone?