Taxation of T-Bills

T-bills or Treasury Bills are short-term debt instruments issued by the Government of India. The taxation of T-bills depends on whether they are held till maturity or sold before maturity.

If T-bills are sold before maturity, they are treated as a form of interest income and taxed under the head "Income from Other Sources" in the ITR.

If T-bills are held till maturity, they are considered as capital assets and are taxed under the head "Income from Capital Gains" in the Income Tax Return (ITR).
 

 

Absolutely wrong. Can you give the relevant income tax section in support of your contention?

Section 56(2)(ix) of the Income Tax Act specifically deals with the taxation of income from the transfer of certain capital assets, including T-bills. This section states that if an individual or a Hindu Undivided Family (HUF) receives any sum of money as a result of the transfer of a capital asset, including Treasury Bills, by way of gift or otherwise without consideration, the fair market value of such asset will be deemed as the individual's or the HUF's income for that financial year. This fair market value is then subject to tax under the applicable tax rates.

The section mentioned by you doesn't include T-BILLS! Copy paste the wordings please.
Let's see the reasoning why you are wrong.By definition T-BILLS are promise to pay with a upfront discount.A promise to pay is not "income". Besides, upfront discount is not an "income" either!
T-Bills don't have any tax payable on it for individuals.Also, by same reason there is no TDS!