Taxation on liquid funds in mutual fund

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2014 Hi, I have a small query as mentioned below. 1. My income is not taxable.

2. I want to invest in liquid mutual funds. Some investment will be of more then 1 year & some will be of less then a year.

3. What will be the tax effect for investments of less then a year & more then a year.

4. As for long term I understand that 10% without index & 20% with index. Now. as my income is below taxable limit, do I still have to count 10% or 20% tax, as applicable & pay it accordingly or will it be added to my income & there after as my income is below tax limit, so I do not have to pay tax at all??

Plz. advice. Thank you.

Aditya Maheshwari

Aditya Maheshwari (Expert)

08 April 2014 In liquid funds generally dividends are declared daily / weekly on your fund depending on your scheme. The dividend declared is tax free. Hence the accumulation is dividend and hence not liable for tax under income tax act though if income below exemption limit then no need to pay tax separately on STCG / LTCG on sale of units of liquid fund.

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2014 Thank you for your reply. I forgot to mention that I want to opt for Liquid fund- GROWTH OPTION. So in that case, can you please throw some light on taxation of growth option of liquid fund.

Thanks.

Aditya Maheshwari

Aditya Maheshwari (Expert)

08 April 2014 For long term 10% without index & 20% with index short term taxable at slab rates since no STT is paid.

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2014 Thanks. Just need to clarify, that will it be added to my income & as my income below taxable limit, so need not pay anything.

Or have to pay 10% without index & 20% with Index, even my income is below taxable limit?

Thank you.

Aditya Maheshwari

Aditya Maheshwari (Expert)

08 April 2014 The same had been replied in the first post in case income below exemption limit no tax to be payable seperately.

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