What is the meaning of Short term debt fund and Liquid fund?
What is the tenure of it ,is it fixed?
What about the taxation ,if more than year is it still taxable on selling it etc
Liquid Funds-Safest among all types of Debt Funds. Usually, they invest in very short-term market instruments such as treasury bills, government securities and call money that hold least amount of risk. Usually the maturity period of such instruments will be 91 days. There will be no exist load in liquid funds. These funds offers better liquidity than other types of funds.
Short Term debt Funds-Next comes Ultra Short Term or Short Term Debt Funds. They are bit risky than liquid funds. Ultra Short Term Debt funds usually not invest more than 1 year maturity instruments. Whereas Short Term Debt Funds invest in instruments which mature up to 3 years. There will be exit load in some funds. Hence, you have to check and accordingly invest.
In terms of taxation, both funds offer same tax benefits. I explained the same in my blog post. Refer the same at “Mutual Fund Taxation – Capital Gain Tax Rates for FY 2016-17“.
So for Liquid fund which mature after 91 days ,if i redeem it then it will taxed as STCG it less than 3 yrs holding period .
So for it to be LTCG i have to keep that fund for more than 3 years to get taxed little less as compared to STCG ?