Is Income From Liquid Fund Taxable?

Do liquid funds have lock in period?

Definition: Liquid funds are a type of mutual funds that invest in securities with a residual maturity of up to 91 days.

Assets invested are not tied up for a long time as liquid funds do not have a lock-in period..

How much tax do you pay on mutual fund withdrawals?

The short-term capital gains (STCG) on redemption of equity fund units is taxable at the rate of 15%. The long-term capital gains (LTCG) on equity fund up to Rs 1 lakh is tax-free. However, LTCG on equity fund redemption in excess of Rs 1 lakh is taxable at the rate of 10% without the benefit of indexation.

Is liquid fund interest taxable?

If the liquid fund investment is held for more than three years, it is subject to long term capital gains which is taxable at 20% with indexation. If the investment is held for three years or less than that, the capital gain is taxed at the marginal (highest) tax slab rate applicable to the assessee.

Is Liquid Fund better than FD?

Liquid fund investors are considered to be in a better position than fixed deposit holders in case of taxation on their respective investments. When it comes to tax on liquid funds, the investors are entitled to avail tax indexation, which directly helps them to lower their burden of tax-related expenses.

Is it good time to invest in liquid funds?

Liquid funds have no lock-in or very low lock-in period. The interest rate of liquid mutual funds is the lowest among all short-term investments due to low maturity period. … Liquid funds are a perfect solution for investors who wish to park their idle cash for a short duration without the risk of Capital Loss.

What is benefit of liquid fund?

What Are The Advantages Of Liquid Funds? Liquid funds are ideal for investors who want to park their money for short period of time. The aim of these funds is to provide higher returns than bank accounts while offering a similar level of security for the money invested.

Is Fd a liquid asset?

Fixed Deposits can be *withdrawn* anytime..you may not get the promised interest amount but you can break it any time….and are considered as liquid assets..

Is it safe to keep money in liquid funds?

Although liquid funds are not entirely risk-free, however, they are low risk-low returns instruments. As they invest predominantly in debt instruments, they are subject to interest rate risk and credit risk. … In this way, the fund manager reduces credit risk by holding a well-diversified portfolio of securities.

Can liquid funds give negative returns?

On an average, liquid funds have delivered 0% over the past week, according to data from Value Research and many large liquid funds have actually delivered negative returns. … These are categories that normally do not deliver negative returns, even over short time periods and are considered extremely low risk.

Are liquid funds good?

High liquidity- Investors can get access to their money in just 24 hours. Least risk- As the maturity period is 91 days, the NAV of liquid funds does not fluctuate all that often….Top 10 Liquid Mutual Funds.Fund NameAditya Birla Sun Life Liquid FundCategoryDebtRiskLow1Y Returns4.9%Rating5star15 more columns

How long does it take to redeem Liquid Fund?

It takes around 1-3 working days to get money in your bank when you redeem from mutual funds. For Liquid Funds, it takes 1 working day to get back money. There are some instant redemption schemes where you get money immediately. For Debt Funds, it takes 2 working days.

Which liquid funds are best?

5. Top 10 Liquid Funds in IndiaFund name5-year average returnsLinkICICI Prudential Money Market Fund Regular Growth7.50%Invest NowKotak Money Market Growth7.44%Invest NowUTI Money Market Fund-Discontinued – Regular Plan-Growth6.95%Invest NowAditya Birla Sun Life Liquid Regular Plan Growth6.92%Invest Now6 more rows•Sep 10, 2020

Are mutual funds taxed when withdrawn?

If you have mutual funds in these types of accounts, you pay taxes only when earnings or pre-tax contributions are withdrawn. … If you hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares.

Are liquid funds tax free?

Taxation on Liquid Funds Investors earn dividends and capital gains from liquid funds. Investors do not pay any tax on dividend income from mutual funds.

When can I withdraw from liquid fund?

In case of liquid funds, there will be a small exit load if withdrawal is made within the first seven days of the investment. Also, in case of savings bank accounts, the interest earned up to ₹10,000 per year is tax-free, while in case of liquid funds, you will have to pay short-term or long-term capital gains tax.

How do you calculate capital gains on debt funds?

Step 3: From your redemption value, minus the initial investment to ascertain the amount of gain. If it is short-term capital gain, your tax is calculated as per the income tax rate applicable to you. If it is long-term capital gain, the tax rate is 20 per cent with cost indexation.

Is income from debt fund taxable?

Tax on debt mutual funds – The minimum holding period for short term capital gains in debt funds is 3 years. … Therefore, if your tax rate is 30% then short term capital gains tax on debt fund is 30% + 4% cess. Long term capital gains of debt fund are taxed at 20% with indexation.

Can I withdraw money from liquid fund?

Liquid Funds are ideal for parking your surplus money for a few weeks or months. Your investment will continue to earn returns as long as you stay invested. You can withdraw your money instantly, anytime*.