I would like to put some money in a liquid fund for a short term. Is it possible to withdraw this money anytime without any tax implications? Is it possible to transfer money from a liquid fund to an equity fund at a later date?
- Shajahan
Liquid funds are ideal to park money for a few days to weeks. However, they don't offer any tax advantages anymore after the changes in their taxation in the last budget. Short-term capital gains on investments in debt funds, including liquid funds, held for less than three years are added to the income of the investor and taxed according to the applicable tax slab. You can transfer the money from a liquid fund to an equity fund regularly via Systematic Transfer Plan (STP).
This article was originally published on October 08, 2015.
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