Bonds vs T-bills: what is the difference, and which pays more?

A T-bill and a G-sec are both government debt; the bigger difference is between a T-bill and a corporate bond, which adds the risk of one company not paying.

How do they compare?

	T-bill	G-sec (dated government bond)	Corporate bond or NCD
Issuer	Government of India	Government of India	A company
Term	Within a year (91 day is the most asked about)	Several years	Months to years
How you earn	Gap between allotment price and ₹100	Coupon, plus or minus price change	Coupon, plus or minus price change
Buying	Non-competitive bid from ₹10,000	Non-competitive bid from ₹10,000, or the order book	OBPP, order book or NCD IPO
Tax	Short-term capital gain at slab	Interest at slab	Interest at slab, 10% TDS if listed
Price swing if rates move	Small	Larger the longer the term	Rates and credit both move it

Sources: NSE, HDFC Securities, Zerodha, EY.

How is the T-bill yield worked out?

For a 91 day bill allotted at ₹98.25, the return over 91 days is (₹100 less ₹98.25) ÷ ₹98.25 = 1.78%, and 1.78% × 365 ÷ 91 = about 7.14% a year. ₹98.25 is an illustration, not a current auction result. Compare the annualised figure with a bond's YTM; comparing the 1.78% with an annual rate understates the T-bill about 4 times over. The walk-through is in how to buy T-bills.

Which pays more?

Usually a corporate bond, because you take on the issuer's credit risk and a harder exit; platform ranges such as 8% to 14% for bonds rated down to BBB show the spread (GoldenPi). Between a T-bill and a G-sec the gap depends on the yield curve on the day. See G-sec vs T-bill and corporate vs government bonds.

T-bill vs FD?

Both are taxed at your slab rate, so the comparison is annualised yield, credit and exit. A T-bill is sovereign and can be sold on the exchange; a bank FD is covered by deposit insurance up to a limit and is broken on the bank's terms. A TradingQnA thread titled "T-bill rates are nearly 2% higher than FD rates" has 6,366 views (TradingQnA); check the rates on the day. See bonds vs FD.

Where do I buy T-bills?

Bids are free on RBI Retail Direct, Zerodha and Fyers, and cost 0.06% plus GST at Upstox and HDFC Securities. Retail Direct has offered T-bill auto-bidding since 6th Aug 2025 (Business Standard). GoldenPi, Jiraaf and Altifi also list T-bills. More in where to buy G-secs and T-bills without a fee.