{"id":7963,"date":"2025-04-22T12:57:07","date_gmt":"2025-04-22T07:27:07","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=7963"},"modified":"2025-04-22T12:57:10","modified_gmt":"2025-04-22T07:27:10","slug":"best-liquid-funds-in-india","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/","title":{"rendered":"Top Liquid Funds in India &#8211; Meaning, Examples and Taxation in 2025"},"content":{"rendered":"\n<p>Liquid funds occupy a distinctive niche in India\u2019s debt-mutual-fund landscape, offering a low-duration avenue for parking surplus cash without locking it into traditional fixed-income products. Regulated by SEBI as a category of debt schemes that invest in money-market and short-term instruments with residual maturities of up to 91 days, these funds aim to combine high liquidity with relatively low volatility. This article will explore the top liquid funds, taxation, factors and more.\u00a0<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Best-Liquid-Funds-in-India-%E2%80%93-Updated-April-2025\" title=\"Best Liquid Funds in India &#8211; Updated April 2025\">Best Liquid Funds in India &#8211; Updated April 2025<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Overview-of-the-Top-Liquid-Funds-in-India\" title=\"Overview of the Top Liquid Funds in India\">Overview of the Top Liquid Funds in India<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Quant-Liquid-Plan\" title=\"Quant Liquid Plan\">Quant Liquid Plan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Aditya-Birla-SL-Liquid-Fund\" title=\"Aditya Birla SL Liquid Fund\">Aditya Birla SL Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Mahindra-Manulife-Liquid-Fund\" title=\"Mahindra Manulife Liquid Fund\">Mahindra Manulife Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#PGIM-India-Liquid-Fund\" title=\"PGIM India Liquid Fund\">PGIM India Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Edelweiss-Liquid-Fund\" title=\"Edelweiss Liquid Fund\">Edelweiss Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Union-Liquid-Fund\" title=\"Union Liquid Fund\">Union Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Axis-Liquid-Fund\" title=\"Axis Liquid Fund\">Axis Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Nippon-India-Liquid-Fund\" title=\"Nippon India Liquid Fund\">Nippon India Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Mirae-Asset-Liquid-Fund\" title=\"Mirae Asset Liquid Fund\">Mirae Asset Liquid Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Bank-of-India-Liquid-Fund\" title=\"Bank of India Liquid Fund\">Bank of India Liquid Fund<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#What-are-Liquid-Funds\" title=\"What are Liquid Funds?\">What are Liquid Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Who-Can-Invest-in-Liquid-Funds\" title=\"Who Can Invest in Liquid Funds?\">Who Can Invest in Liquid Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Factors-to-Consider-Before-Investing-in-Liquid-Funds\" title=\"Factors to Consider Before Investing in Liquid Funds\">Factors to Consider Before Investing in Liquid Funds<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Risks\" title=\"Risks\">Risks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Returns\" title=\"Returns\">Returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Exit-load\" title=\"Exit load\">Exit load<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Expense-ratio\" title=\"Expense ratio\">Expense ratio<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Investment-plan\" title=\"Investment plan\">Investment plan<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Taxation-on-Liquid-Funds-in-India\" title=\"Taxation on Liquid Funds in India\">Taxation on Liquid Funds in India<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Short-Term-Capital-Gains-STCG\" title=\"Short-Term Capital Gains (STCG)\">Short-Term Capital Gains (STCG)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Long-Term-Capital-Gains-LTCG\" title=\"Long-Term Capital Gains (LTCG)\">Long-Term Capital Gains (LTCG)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Summary\" title=\"Summary\">Summary<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Conclusion\" title=\"Conclusion&nbsp;\">Conclusion&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#Frequently-Asked-Questions-About-Liquid-Funds\" title=\"Frequently Asked Questions About Liquid Funds\">Frequently Asked Questions About Liquid Funds<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#1-How-to-invest-in-liquid-funds\" title=\"1. How to invest in liquid funds?\">1. How to invest in liquid funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/www.tickertape.in\/blog\/best-liquid-funds-in-india\/#2-What-are-the-top-5-liquid-funds-in-2025\" title=\"2. What are the top 5 liquid funds in 2025?\">2. What are the top 5 liquid funds in 2025?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Best-Liquid-Funds-in-India-%E2%80%93-Updated-April-2025\"><\/span>Best Liquid Funds in India &#8211; Updated April 2025<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Name<\/strong><\/td><td><strong>AUM (Rs. in cr.)<\/strong><\/td><td><strong>5Y CAGR (%)<\/strong><\/td><td><strong>3Y CAGR (%)<\/strong><\/td><td><strong>Expense Ratio (%)<\/strong><\/td><td><strong>Volatility (%)<\/strong><\/td><td><strong>Minimum Lumpsum (Rs.)<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/quant-liquid-plan-M_QUTI\"><strong>Quant Liquid Plan<\/strong><\/a><\/td><td>1,536.26<\/td><td>5.87<\/td><td>6.78<\/td><td>0.25<\/td><td>0.15<\/td><td>5000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/aditya-birla-sl-liquid-fund-M_ADTUF\"><strong>Aditya Birla SL Liquid Fund<\/strong><\/a><\/td><td>41,051.49<\/td><td>5.58<\/td><td>6.95<\/td><td>0.21<\/td><td>0.10<\/td><td>500<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/mahindra-manulife-liquid-fund-M_MADG\"><strong>Mahindra Manulife Liquid Fund<\/strong><\/a><\/td><td>1,025.78<\/td><td>5.58<\/td><td>6.94<\/td><td>0.15<\/td><td>0.09<\/td><td>1000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/pgim-india-liquid-fund-M_PGST\"><strong>PGIM India Liquid Fund<\/strong><\/a><\/td><td>365.97<\/td><td>5.57<\/td><td>6.93<\/td><td>0.12<\/td><td>0.11<\/td><td>5000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/edelweiss-liquid-fund-M_EDQI\"><strong>Edelweiss Liquid Fund<\/strong><\/a><\/td><td>5,243.37<\/td><td>5.57<\/td><td>6.93<\/td><td>0.09<\/td><td>0.10<\/td><td>100<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/union-liquid-fund-M_UNLF\"><strong>Union Liquid Fund<\/strong><\/a><\/td><td>3,206.36<\/td><td>5.55<\/td><td>6.92<\/td><td>0.08<\/td><td>0.10<\/td><td>5000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/axis-liquid-fund-M_AXLF\"><strong>Axis Liquid Fund<\/strong><\/a><\/td><td>32,608.90<\/td><td>5.54<\/td><td>6.93<\/td><td>0.09<\/td><td>0.10<\/td><td>500<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/nippon-india-liquid-fund-M_NIQG\"><strong>Nippon India Liquid Fund<\/strong><\/a><\/td><td>28,240.76<\/td><td>5.54<\/td><td>6.90<\/td><td>0.2<\/td><td>0.10<\/td><td>1000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/mirae-asset-liquid-fund-M_MIEM\"><strong>Mirae Asset Liquid Fund<\/strong><\/a><\/td><td>8,684.21<\/td><td>5.54<\/td><td>6.91<\/td><td>0.09<\/td><td>0.10<\/td><td>5000<\/td><\/tr><tr><td><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/bank-of-india-liquid-fund-M_BOLI\"><strong>Bank of India Liquid Fund<\/strong><\/a><\/td><td>1,523.92<\/td><td>5.53<\/td><td>6.92<\/td><td>0.1<\/td><td>0.09<\/td><td>5000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Note: <\/strong>The above information is dated 22nd April 2025. The parameters used to filter the list of top flexi cap funds on<a href=\"https:\/\/ttape.in\/GJJaVlp81tb\" rel=\"nofollow noopener\" target=\"_blank\"> Tickertape<\/a>\u2019s<a href=\"https:\/\/www.tickertape.in\/screener\/mutual-fund?utm_source=blog&amp;utm_medium=article\"> Mutual Fund Screener<\/a> are:<\/p>\n\n\n\n<ul>\n<li><strong>Category > Debt > Liquid Fund<\/strong><\/li>\n\n\n\n<li><strong>Plan \u2013 <\/strong>Growth<\/li>\n\n\n\n<li><strong>5Y CAGR: <\/strong>Set high to low<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview-of-the-Top-Liquid-Funds-in-India\"><\/span>Overview of the Top Liquid Funds in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Quant-Liquid-Plan\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/quant-liquid-plan-M_QUTI\">Quant Liquid Plan<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Quant Liquid Plan is a short-term debt mutual fund by Quant Mutual Fund, focusing on investing in money market instruments with high liquidity and minimal risk. It aims to provide optimal returns for investors seeking a safe, low-duration investment alternative with quick redemption options and stable income generation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Aditya-Birla-SL-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/aditya-birla-sl-liquid-fund-M_ADTUF\">Aditya Birla SL Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Aditya Birla Sun Life Liquid Fund offers a low-risk, high-liquidity investment option. Managed by Aditya Birla Sun Life AMC, it invests in short-term debt instruments like treasury bills and certificates of deposit, catering to investors looking for capital preservation and better returns than savings accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mahindra-Manulife-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/mahindra-manulife-liquid-fund-M_MADG\">Mahindra Manulife Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Mahindra Manulife Liquid Fund provides a secure investment avenue with high liquidity, targeting short-term money market instruments. Managed by Mahindra Manulife Investment Management, it aims to meet investors\u2019 needs for capital protection and efficient cash management through a diversified portfolio of low-risk debt securities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"PGIM-India-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/pgim-india-liquid-fund-M_PGST\">PGIM India Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>PGIM India Liquid Fund, managed by PGIM India Mutual Fund, invests in high-quality debt and money market instruments. It is designed for conservative investors seeking a safe place to park funds for short durations, offering daily liquidity and stable returns with minimal interest rate risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Edelweiss-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/edelweiss-liquid-fund-M_EDQI\">Edelweiss Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Edelweiss Liquid Fund, from Edelweiss Mutual Fund, is designed for short-term investors who prioritise liquidity and capital preservation. It invests in low-duration instruments such as treasury bills and commercial papers, offering easy access to funds while maintaining a conservative investment profile with consistent short-term yields.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Union-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/union-liquid-fund-M_UNLF\">Union Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Union Mutual Fund manages the Union Liquid Fund and invests in a mix of short-term debt and money market instruments. It caters to investors seeking immediate liquidity, low volatility, and capital safety, making it a suitable alternative to traditional savings instruments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Axis-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/axis-liquid-fund-M_AXLF\">Axis Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Axis Liquid Fund, operated by Axis Mutual Fund, is designed for investors seeking low-risk investments with high liquidity. It focuses on high-credit-quality money market instruments and short-duration debt securities, making it an ideal option for short-term parking of surplus funds.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nippon-India-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/nippon-india-liquid-fund-M_NIQG\">Nippon India Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Nippon India Liquid Fund, from Nippon India Mutual Fund, targets low-duration debt instruments to offer high liquidity and stable returns. It suits investors who prioritise capital preservation and quick access to funds, acting as a flexible financial buffer or short-term savings tool.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mirae-Asset-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/mirae-asset-liquid-fund-M_MIEM\">Mirae Asset Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Mirae Asset Liquid Fund is a short-term debt fund offered by Mirae Asset Mutual Fund, which invests in high-quality money market instruments. It is intended for conservative investors seeking capital preservation, daily liquidity, and returns slightly above traditional savings methods, making it ideal for deploying temporary surpluses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bank-of-India-Liquid-Fund\"><\/span><a href=\"https:\/\/www.tickertape.in\/mutualfunds\/bank-of-india-liquid-fund-M_BOLI\">Bank of India Liquid Fund<\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Bank of India Liquid Fund, managed by BOI AXA Mutual Fund, offers a low-risk investment solution through short-term debt and money market instruments. It focuses on maintaining high liquidity and capital safety, catering to investors who seek efficient cash management and a stable, short-duration investment option.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What-are-Liquid-Funds\"><\/span>What are Liquid Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Liquid mutual funds for short-term and long-term are also known as money-market funds. They ensure high liquidity to the investors by investing their capital in short-term debt instruments and money market securities. They are considered secure investment instruments because of the high credit rating of money market instruments and the minuscule risk of losing the invested capital.&nbsp;<\/p>\n\n\n\n<p>Some of the instruments that constitute a liquid fund\u2019s portfolio include certificates of deposits (CDs), corporate bonds, treasury bills (T-bills), debentures, commercial paper, and more.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who-Can-Invest-in-Liquid-Funds\"><\/span>Who Can Invest in Liquid Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The returns offered by liquid funds are higher than that of a regular savings account. If you are an Indian and have an account with an Indian bank, then you can invest in liquid funds after completing your Know Your Customer (KYC) formalities. In case you are an NRI, you can also invest in Indian liquid funds as long as you adhere to the<a href=\"https:\/\/www.rbi.org.in\/SCRIPTs\/BS_FemaNotifications.aspx?Id=183\" rel=\"nofollow noopener\" target=\"_blank\"> Foreign Exchange Management Act<\/a> (FEMA).<\/p>\n\n\n\n<p>Generally, investors choose liquid funds for a short-term investment plan. Another reason to choose liquid investment funds is that they also offer indexation benefits. Therefore, whether or not you should invest in the best liquid funds for investment depends on your financial goals and other factors!&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Factors-to-Consider-Before-Investing-in-Liquid-Funds\"><\/span>Factors to Consider Before Investing in Liquid Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are some crucial aspects that you must consider before investing in liquid funds in India:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risks\"><\/span>Risks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Even the best liquid mutual funds do not experience a lot of volatility. Hence, the net asset value (NAV) of the fund remains almost steady. However, if the credit rating of any underlying security drops, then there is a possibility that the NAV can experience a drop, too.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Returns\"><\/span>Returns<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Regarding numbers, savings accounts in India have a return rate of ~4%. Whereas a liquid fund offers you around 4-8% returns on average. Therefore, consider the liquid fund returns when you are planning to invest in high-return liquid funds.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exit-load\"><\/span>Exit load<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is critical to note that though liquid funds can be redeemed anytime, an exit load would apply if you redeem the funds within the first seven days. This would reduce the net earnings from the fund.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Expense-ratio\"><\/span>Expense ratio<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Liquid funds charge an annual fee called an expense ratio for fund management services. This is a percentage of the total assets of the fund. Hence, this is one of the important factors to consider when choosing a liquid fund.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investment-plan\"><\/span>Investment plan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Before investing in any instrument, make sure you have a proper investment plan. Many investors use liquid funds to create an emergency fund, offering higher liquidity while giving reasonable returns at lower risk.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxation-on-Liquid-Funds-in-India\"><\/span>Taxation on Liquid Funds in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Liquid mutual funds India are taxed as debt funds in India. Understanding the latest tax regulations on debt mutual funds is crucial for effectively managing your investments. The Union Budget 2024 has introduced significant changes to the taxation of debt mutual funds. Here is a detailed breakdown of the new tax rules:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Short-Term-Capital-Gains-STCG\"><\/span>Short-Term Capital Gains (STCG)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you sell your liquid mutual fund options within three years (36 months), the gains from these investments are considered short-term capital gains. According to the new budget, these gains will be taxed according to your income tax slab rate.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Long-Term-Capital-Gains-LTCG\"><\/span>Long-Term Capital Gains (LTCG)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For tax-efficient liquid funds held for over three years (36 months), the gains are categorised as long-term capital gains. The key points to note under the new budget are:<\/p>\n\n\n\n<ul>\n<li><strong>Tax Rate<\/strong>: The tax rate for long-term capital gains on liquid fund schemes is now a flat 12.5%, regardless of the amount of gain.<\/li>\n\n\n\n<li><strong>No Indexation Benefit<\/strong>: The benefit of indexation, which previously allowed investors to adjust the purchase price of their assets for inflation, has been removed for debt funds. This means that the entire gain from selling a debt fund after three years will be taxable at the flat rate of 12.5%.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Summary\"><\/span>Summary<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Capital Gains Tax<\/strong><\/td><td><strong>Description<\/strong><\/td><\/tr><tr><td><strong>Short-Term Capital Gains (STCG)<\/strong><\/td><td>If you sell your debt fund units within three years (36 months), the tax will be as per your income tax slab.<\/td><\/tr><tr><td><strong>Long-Term Capital Gains (LTCG)<\/strong><\/td><td>For debt funds held for over three years (36 months), the tax rate is now a flat 12.5% without indexation benefits.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Liquid Funds are low-risk investment instruments with better returns for a short-term investment plan. Whether to invest in short-term liquid funds depends entirely on your financial goals. However, before investing, consult your financial advisors and tailor your portfolio for risk tolerance and market volatility. You can save your efforts and time by using<a href=\"https:\/\/www.tickertape.in\/screener\/mutual-fund?utm_source=blog&amp;utm_medium=article\"> Tickertape\u2019s Mutual Fund Screener<\/a> to find the best mutual fund based on your risk tolerance and investment preferences!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions-About-Liquid-Funds\"><\/span>Frequently Asked Questions About Liquid Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1745306740355\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"1-How-to-invest-in-liquid-funds\"><\/span><strong>1. How to invest in liquid funds?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Investing in low-risk liquid funds is similar to investing in any other mutual fund. You can use<a href=\"https:\/\/www.tickertape.in\/portfolio\/mutualfunds?utm_source=blog&amp;utm_medium=article\"> Tickertape Mutual Fund Screener<\/a> to find the best funds that suit your investment needs. Once you\u2019ve chosen the best mutual fund, you can visit their website and invest. After investing in the mutual fund, you can use the<a href=\"https:\/\/www.tickertape.in\/portfolio\/mutualfunds?utm_source=blog&amp;utm_medium=article\"> Tickertape Portfolio<\/a> to constantly monitor the liquid mutual funds performance of the fund.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1745306767256\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"2-What-are-the-top-5-liquid-funds-in-2025\"><\/span>2. <strong>What are the top 5 liquid funds in 2025?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The top 5 liquid funds based on 5Y CAGR are\u00a0\u00a0<br \/>&#8211; Quant Liquid Plan<br \/>&#8211; Aditya Birla SL Liquid Fund<br \/>&#8211; Mahindra Manulife Liquid Fund<br \/>&#8211; PGIM India Liquid Fund<br \/>= Edelweiss Liquid Fund<br \/><strong>Note:<\/strong> These are curated from Tickertape Mutual Fund Screener and as of 22nd April 2025. The funds are derived based on the 5-yr CAGR. You can use your preferred parameters like 3yr-CAGR, Absolute Returns &#8211; 3M, etc., to get the top liquid funds.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Get a list of the best liquid funds in India for 2025, investing in debt instruments. Learn about liquid mutual fund taxation, expense ratio and compare examples. <\/p>\n","protected":false},"author":136,"featured_media":7779,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[1750,1721],"tags":[],"acf":[],"modified_by":"Aishika Banerjee","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/03\/01.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7963"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/136"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=7963"}],"version-history":[{"count":29,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7963\/revisions"}],"predecessor-version":[{"id":16886,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7963\/revisions\/16886"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/7779"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=7963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=7963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=7963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}