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How to compare liquid fund return with savings account post taxes

If I am paying 30% tax, invested 800,000 on 18th Dec 2016 in HDFC Liquid Fund - Growth and today 11th April 2017 I exit from this fund with value of 816,000 then what is the positive comparison of this return with bank saving account on tax basis and return also?

Apr 17, 2017 by Sweta Janak Mehta, Malad West  |   Mutual Fund

You invested Rs. 800,000 in HDFC liquid fund on 18/12/16 @ NAV Rs 3141.5415 and got 254.6520 units and sold on 11/4/16 when NAV was Rs 3205.937. You got a redemption amount of Rs. 816,398.44 and thus made a short term capital gains of Rs 16,398.44 on which tax @ 30% is payable i.e. Rs 4919.532. Nett gain Rs. 11.478. 91

For the same period had you kept your 800,000 in savings bank account you would have got Rs. 7,364.40 as interest (assuming 4%). Under Section 80TTA, interest on savings account upto Rs. 10,000 is tax free in a year. Therefore, your gain is Rs. 7,364.40.

Post tax you are getting Rs 4,114.51 more from liquid funds (Rs 11,478.91 minus Rs 7,364.40)

Hope the above is clear to understand. Thanks for writing to Advisorkhoj.

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