LiquidBEES Taxation

Hi

I have some sale and purchase of LiquidBEES in the previous FY whereby transactions updated from Zerodha are being tagged as Equity transactions for the purposes of Capital Gains calculations. Because of this, I have 2 major 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- which has been charged for me). Since there is no fluctuation in price (and entire return is in form of dividends which I have declared anyway), 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?

don’t want anyone to deduct the TDS !
in the “LIQUIDBEES” !

i want to submit : the form 15 H / G !

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whom should i submit the form 15 h/g ?

to the broker DP or to the nippon india company ?

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i am resident indian .

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@TeamQuicko Can you please clarify?

Hey @Laxmi_Navlani , can you please help here?

In LQBEES:

  1. The dividend units that get credited every week show up as DIVIDEND on FORM 26AS, which get added to income and taxed according to slab
  2. Also TDS is deducted as well on those dividends.

Why are we paying taxes twice?

Hey, the dividend you receive is a part of your taxable income. However, if TDS has already been deducted from it, you will be able to claim tax credits while filing ITR. Hope this helps

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Well, one thing I observed is, the dividends from liquidbees are showing up in Equity capital gains when I connect with zerodha. And when I integrate my ITR account, it gets added to dividend as well. So does that mean it gets added twice to my taxable income? One time as capital gains? And the second time as dividend income?

Hey @dan,

When you receive a unit of LiquidBEES in form of dividend, it is taxed under Income from other sources. When you sell these units, the amount on which tax is already paid as dividend is treated as cost of acquisition and gains are then taxed under Income from Capital gains. We don’t have to doubly pay tax on same income.

On Quicko’s platform, when you use the integration with Zerodha the income from capital gain is imported, whereas when you import data using Prefill JSON downloaded from the Income tax website the dividends are fetched.

Hope this helps!

1 Like

Hi,

As a follow up question to this one, if a son receives shares as a gift from father (direct blood relation) and sells them at a later date how should the capital gains tax be computed if the shares are LIQUIDBEES/LIQUIDETFs?

For eg, If the son receives 1000 LIQUIDBEES/LIQUIDETFs as a gift from the father then when the son sells those shares will he have to pay any capital gain tax on them?

Also what about shares other than LIQUID funds? How should one think about the acquisition price ?

Thank you in advance.

Hi @Tanveer_Sure

If a son receives shares as a gift from his father, then the capital gains shall be taxed in the hands of the son. Here’s a read on Tax on Gifted Shares & Securities - Learn by Quicko for your better understanding of tax computation.

Liquidbees/LiquidETFs are exchange-traded funds (ETFs) that trade just like a share. Hence, the taxation shall be the same as for ETF’s. ETF - Tax on ETF (Exchange Traded Funds) in India - Learn by Quicko

For shares other than Liquid funds, the acquisition price shall be taken into consideration in the same way as discussed in the above read on tax on gifted shares & securities.

Hope this helps.