How does taxation work for T-Bills, SDLs and Government bonds?

A) Government Bonds & SDLs

1. Interest Income:

   • Considered "Income from Other Sources" and taxed as per your applicable income tax slab.

2. Capital Gains Tax:

   • Long-Term Capital Gains (LTCG): Tax rate increased from 10% to 12.5%.
   • Short-Term Capital Gains (STCG): Taxed as per the applicable slab rate.

3. Tax Deducted at Source (TDS):

   • If interest payments on Government bonds exceed ₹10,000, TDS @ 10% is deducted.

B) T-bills

1. Pricing & Gains:

   • Purchased at a discount and redeemed at par.
   • The appreciation (difference between purchase and redemption price) is treated as STCG.

2. Taxation:

   • Taxed as per the applicable slab rate.