Treasury Bills Calculation Examples


An investor intents to place Ksh 12,000,000 in the 91 days Treasury bill at a quoted rate/yield of 7.65% p.a. What is his/her return, if s/he is withholding tax-payer or non-withholding taxpayer?

Using the formula above already inputted in Treasury bills calculator on the Central Bank website published as the ‘Treasury bills pricing calculator’, by clicking on the link www.centralbank/securities/bills/TreasuryBillsCalculator , the investor’s return will be as follows:

  • For Non-Withholding Tax payer at 15%;

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This implies for every Ksh 100 investor wishes to lend to the Government, s/he will pay Ksh 98.128 on the value date (the day the government borrows) and receive Ksh 100 on maturity date (the 91st day). This translates to a net return of Ksh 1.872 per Ksh 100. Therefore for Ksh 12,000,000, the investor will pay the Government a total of

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Implying investor’s total return/interest amount is Ksh (12,000,000 – 11,775,360) = Ksh 224,640 in 3-months period.

  • For Withholding Tax payer at 15%, the investor’s total return/interest amount will be Ksh (12,000,000 – 11,775,360) = Ksh 224,640 in 3-months period.

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But 15% withholding tax = Introduction clip image008

Then investor pays = Introduction clip image010
Implying, the investor’s return is Ksh 190,944 for 3-months investment of Ksh 12mn.

Note: An investor will be exempt from paying withholding Tax on presentation of Tax Exemption Certificate from the Kenya Revenue Authority (KRA).