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.
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.
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?
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.
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-reddy
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.
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?
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?
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.