So I have booked some profit of around 1200 in liquidcase etf by zerodha and I assumed as its a liquid fund it should be taxed at 30% (slab rate) but when I downloaded the tax p&l report from my zerodha console it is treating this 1200rs profit as stcg and not as debt income. Is my understanding regarding it being treated as debt income flawed or is it a mistake by zerodha’s p&l statement.
I know this question might be very basic but insights would be greatly appreciated, thanks in advance!
Both are correct 
STCG has two broad applicable rates.
If STT is applicable, STCG is charged at a concessional rate of 20% after last july’s budget (it was 15% earlier )
if STT is not applicable, STCG is charged at your slab rate. (Liquid ETFs fall under this category as there is not STT)
Your assumption is correct here as well
Really Appreciate the response, I did not know about the STT charges. As far as I understand mutual funds also do not have any STT charges, so a fund like a conservative hybrid fund would also be treated under my slab rate, correct? Even this is being showed as stcg in my zerodha p&l…
There’s an STT charge of 0.001% for Mutual Funds. So, 1st case will be applicable for them. 20% in case of STCG and 12.5% in case of LTCG (with an exemption up to 1.25 lks)
Then what are the mutual funds which are treated under slab rates? Is there no STT levied on pure liquid and debt funds for example? Thanks for being patient in the responses
Debt-oriented MFs (Liquid and debt funds) don’t attract STT. Whereas Equity-oriented ones do. That’s the key differentiator that ultimately determines how these both are taxed.
Thanks so much!
Even I had this confusion. This was really helpful.