AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
The common belief that treasury bill returns are tax-free is out of date: from late 2025 the tax authority directed banks and dealers to deduct withholding tax on interest from short-term securities, including T-bills, at 10% according to legal commentary, while FGN bond interest stayed exempt. Fixed deposit interest is also taxed at source, so the after-tax winner is usually whichever has the higher gross yield on a like-for-like basis, and T-bills are quoted as a discount, which flatters them less than it seems.
For years the standard Nigerian advice was simple: a treasury bill beats a fixed deposit of the same rate because T-bill returns were tax-free and fixed deposit interest lost withholding tax. That advice no longer holds as stated. This article sets out what changed, how each product is actually taxed and priced, and how to compare them on the same footing with your own numbers.
What changed on T-bill tax
In 2025 the Federal Inland Revenue Service, now the Nigeria Revenue Service (NRS), issued a public notice directing financial institutions to deduct withholding tax (WHT) from interest on short-term securities. A summary by Advocaat Law Practice on Mondaq (14 November 2025) lists treasury bills, government bonds, promissory notes, corporate bonds, financial papers and bills of exchange, says the deduction is 10% at source, and says remittance is due by the 21st day of the month after payment. It cites sections 78 and 81 of the Companies Income Tax Act and the Deduction of Tax at Source (Withholding) Regulations 2024.
Two further points matter for individuals. Templars' tax digest (8 October 2025) says the notice covers interest payable to any person, including non-corporate entities, so it is not limited to companies. Both Templars and KPMG (4 December 2025) say interest on bonds issued by the Federal Government remains exempt. Neither source says T-bills are exempt.
How fixed deposit interest is taxed
Interest on a naira fixed deposit is taxed at source: the bank deducts WHT before paying you. Kuda's help centre, for example, says it deducts 10% WHT on accrued interest on its savings plans. Banks apply the deduction on their own systems, so the payout advice or statement should show gross interest, the tax taken and the net amount. Our explainer on withholding tax on interest covers how the deduction works and when it can be credited against other tax.
Why a T-bill rate and a fixed deposit rate are not the same thing
A fixed deposit rate is a simple annual interest rate on the amount you place. A T-bill is sold at a discount: you pay less than the face value and receive the full face value at maturity. The published stop rate at an auction is a discount rate, calculated on the face value, not on what you paid. The real return on your money, the true yield, is therefore higher than the discount rate. Our guide to how T-bill auctions work explains the quotes.
- Fixed deposit: rate applies to the principal; interest is usually paid at maturity or at set intervals.
- T-bill: discount applies to face value; your gain is the difference between price and face value.
- Tenor: T-bills come in the tenors offered at each auction; a fixed deposit tenor is agreed with the bank.
- Exit: a T-bill can be sold before maturity in the secondary market at the going price; breaking a fixed deposit usually costs some or all of the interest.
Worked example: the same money in each
This is an example with made-up rates, not today's market. Treat the year as 365 days for simplicity, and assume 10% WHT on both.
| Step | One-year T-bill (example) | One-year fixed deposit (example) |
|---|---|---|
| Quoted rate | 18% discount rate | 20% interest rate |
| You pay in | ₦820,000 for ₦1,000,000 face value | ₦820,000 |
| Gross gain | ₦180,000 | ₦164,000 |
| Gross yield on your money | 21.95% | 20.00% |
| WHT at 10% | ₦18,000 | ₦16,400 |
| Net gain | ₦162,000 | ₦147,600 |
| Net yield on your money | 19.76% | 18.00% |
In this example the T-bill wins, but not because of tax: an 18% discount rate is worth 21.95% on the money you actually invest, which beats a 20% deposit rate before and after tax. Under the old assumption that the T-bill was untaxed, the gap would have looked wider (21.95% against 18.00%). With both taxed at the same rate, the tax cancels out of the comparison and the question becomes which gross yield is higher.
Doing your own comparison
- Convert the T-bill discount rate to a true yield: gain divided by price, scaled to a year by the actual days.
- Ask the bank for its fixed deposit rate on your amount and tenor, in writing.
- Apply the WHT rate each provider says it deducts, and check whether a dealer or app adds a fee or spread on the T-bill.
- Compare net yields for the same tenor. Then weigh access: what each costs you if you need the money early.
What else decides the winner
Tax is now a smaller factor than it used to be, so the practical differences carry more weight. Minimums differ: some apps and dealers sell T-bills from small amounts, while a bank may set a minimum for fixed deposits. Credit risk differs too: a T-bill is a Federal Government obligation, while a fixed deposit is a claim on the bank, covered by NDIC deposit insurance up to ₦5,000,000 per depositor at a deposit money bank, according to the NDIC's FAQ. Rates on both move with the Monetary Policy Rate; see why fixed deposit rates follow the MPR.
Where Pryme fits
If you want naira set aside for a fixed period without dealing in bills, a Fixed Box or an Investment Box in the Pryme app holds it, with the current rate shown in the app before you commit; Investment Box money funds Solid Allianze MFB's lending and its return depends on that lending. See Savings Boxes. For buying bills directly, our guide to buying treasury bills in Nigeria covers the routes.
Questions people ask
Are treasury bills still tax free in Nigeria?
Not as commonly assumed. A 2025 tax authority notice directed financial institutions to deduct withholding tax on interest from short-term securities, including T-bills, and commentators reported a 10% rate. FGN bond interest was stated to remain exempt. Ask your bank or dealer what it deducts today.
Is 18% T-bill better than 20% fixed deposit?
It can be. An 18% discount rate on a one-year bill works out to about 21.95% on the money you pay in, which is higher than a 20% simple deposit rate. Always convert the discount rate before comparing.
How much tax is deducted on fixed deposit interest?
Banks deduct withholding tax on deposit interest at source; Kuda, for example, states 10% on accrued interest. Your payout advice should show gross interest, tax and net.
Can I sell a treasury bill before maturity?
Yes, in the secondary market at the going price, which may be above or below what you paid. Breaking a fixed deposit early usually costs you some or all of the interest instead.
Sources
- Mondaq (Advocaat Law Practice): FIRS imposes 10% withholding tax on interest on short-term securities (14 Nov 2025) · accessed Oct 2026
- Templars: Transcripts, Tax (8 Oct 2025) · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria, guidance on withholding tax on interest from short-term securities (4 Dec 2025) · accessed Oct 2026
- Kuda Help: Save money (savings rates and withholding tax, updated Aug 2026) · accessed Oct 2026
- NDIC: Frequently asked questions · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.