How does taxation work on liquid bees since all gains are in terms of dividends and price remains the same?

Can you update if you got extra units till now or not yet?

No not yet. The team doesnt seem to care to reply/ look into this!

I think fractional units are not shown here. You can login to CDSL to know the exact amount in your account. The number in Kite is always an integer.

Is this still not taxable after new rules for mutual funds dividends

It is taxable, read this post to know more Everything you need to know about Liquidbees and Liquid Exchange Traded Funds (ETFs)

The dividend from liquidbees is in the form of units of liquidbees, not cash. So suppose I have not redeemed those dividend units for cash, so do I still need to pay taxes in such a case. Or tax has to be paid only when I sell those dividend units? can anyone please clarify? Thanks

@Quicko can you.

since , The dividend from liquidbees is in the form of units of liquidbees, not cash.
there is no question of TDS or form 15 !!!
am I right ?

@Quicko

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Dividend on Liquidbees - As per Section 194K, TDS should be deducted on the dividend at the time of credit to the payee’s account or at the time of payment by any mode. Thus, TDS must be deducted even if the dividend is paid in the form of units and not cash. TDS at 10% (7.5% for FY 20-21) should be deducted if the dividend exceeds INR 5,000.

Sale of Liquidbees - TDS is not applicable to Capital Gains from the sale of liquid bees. Investors should pay tax as per applicable rates of Capital Gains.

Read more here - Income Tax on ETFs

For any further queries, write to us on [email protected]

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Dividend on Liquidbees - As per Section 194K, TDS should be deducted on the dividend at the time of credit to the payee’s account or at the time of payment by any mode. Thus, TDS must be deducted even if the dividend is paid in the form of units and not cash. TDS at 10% (7.5% for FY 20-21) should be deducted if the dividend exceeds INR 5,000. Unit holder can provide Form 15G or Form 15H for deduction of TDS at lower rate.

For any further queries, write to us on [email protected]

If someone falls under less than 10% tax slab then how can he get back extra TDS deduction ?

Hi @Stonecold,

You can claim excess TDS deducted from when filing your Income Tax Return.

The details for tax credit available to you will be reflected in your Form 26AS

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Suppose by Liquid Bees interest rate crosses inr.5000, so when I sell Zerodha will cut TDS and give the balance in my trading account? By giving 15g/15h how much would the TDS be reduced to? Also capital gains on liquid bees is the same as that on debt mutual funds, right?

Thanks.

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If the TDS is deducted in units ; how can one claim refund of the TDS from the government?

And how Form 15 h / g would help in this case ?

hi , i invested in liquid bees i got additional units as dividend , so i have two questions

1.) do i need to pay tax on that dividend that I received in the form of additional units ?

2.) at the time of sale of additional units do I need to pay STCG or LTCG depending on holding period ?

kindly do clarify thank you

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Hi @ds8434, Dividend on Liquidbees - As per Section 194K, TDS should be deducted on the dividend at the time of credit to the payee’s account or at the time of payment by any mode. Thus, TDS must be deducted even if the dividend is paid in the form of units and not cash. TDS at 10% (7.5% for FY 20-21) should be deducted if the dividend exceeds INR 5,000.

Receiver needs to pay tax on dividend received as additional units. The dividend amount on which you have paid tax will be considered as cost of acquisition of those units.
At the time of sale, the holding period needs to be considered from the date of dividend received.

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HI @Quicko, quick follow up I have liquidness. 10% is being deducted as TDS. how do I find out how much the rest is and how do I need to pay tax on that. I am using the quicko website to file my taxes. should I just add the dividend amount -TDS to the dividend earned in the other income tab?

Also if they are counted as dividend, would I need to add at by quarter it was deposited in my name. and is there a single place where I can see how much was deposited in my name every quarter any one from Zerodha team @siva

Thank you in advanced!!

The most reliable way of getting Liquid Bees dividend count is to log-in to CDSL and download CAS=Consolidated AC statement. You will receive periodical emails too.

Just check the Transaction part and see how many units are credited.

Hi @Quicko

I have 2 doubts.

  1. LiquidBEES as a product does not fluctuate in price, and the only returns are through issue of additional units as dividend (whereby TDS will be charged if dividend is >5K). Since there is no fluctuation in price, where does the question of Capital Gains arise?

  2. If I assume that the constant price does not always hold true, and there are always some fluctuations (howsoever minor) from the constant price in day to day transactions, Capital Gains can still be calculated. But even in that case, are LiquidBEES to be treated as Equity ETF or Debt ETF?

Hello @viresh.verma2594,

The price of LiquidBEES are not always constant, they do fluctuate sometimes. Although, as you mentioned the fluctuation is mostly minor only. So if you happen to earn any capital gain on such units they are treated as Equity ETF’s.

Hope this helps!