Emergency Fund
Liquid Mutual Funds
Verified Indian financial mathematics, statutory regulations, and step-by-step actionable breakdowns.
Expected Yield6.5% - 7.2% p.a.
Lock-In TenureNone (exit load up to 7 days)
Risk LevelLow Risk
Tax StatusTaxable as Slab
Overview & Statutory Background
Liquid funds invest in treasury bills, commercial paper and other debt securities that mature within 91 days. They offer higher yield than savings accounts with high liquidity, and redemption often arrives within one business day.
Key Features & Operational Guidelines
Invests in instruments with up to 91 days maturity
Instant redemption facility up to a limited amount at some AMCs
Graded exit load if redeemed within 7 days
No lock-in period
Who is Eligible to Invest?
- •All resident individuals, HUFs and NRIs (subject to KYC)
Indian Taxation Breakdown
| Stage | Tax Treatment |
|---|---|
| Initial Investment | No deduction. |
| Interest & Returns | Gains are taxed at your income-tax slab regardless of holding period. |
| Maturity / Withdrawal | No LTCG benefit for debt funds bought after April 2023. |
Advantages & Limitations
Key Advantages (Pros)
- ✓Higher yield than savings accounts
- ✓Excellent liquidity
- ✓Low interest-rate risk
Important Limitations (Cons)
- ✕Not risk-free; credit events are possible
- ✕Taxed at slab rate
- ✕Returns fluctuate slightly
Liquid Mutual Funds FAQs
Liquid funds are among the safest mutual fund categories, but they are not guaranteed. Choose funds from large AMCs with high-quality AAA/sovereign holdings.
Calculate Compound Returns
Use our interactive calculators to simulate exact growth schedules for this asset.