Finance · Free tool
Liquid Fund vs Sweep FD
Liquid funds typically beat sweep FDs by ~0.5-1% (gross), but post Apr-2023, debt fund gains are taxed at slab regardless of holding period. Compare net returns.
₹5,00,000
12 mo
30%
7.2%
6.5%
Liquid Fund
Gross return₹36,000
Net (post-tax)₹25,200
Sweep FD
Gross return₹32,500
Net (post-tax)₹22,750
Liquid Fund wins by ₹2,450 for this scenario.
FAQ
Are liquid funds safe?
Largely yes — they invest in commercial paper, T-bills with < 91 day maturity. Default risk minimal. Mark-to-market volatility is low (1-2%).
What about overnight funds?
Even safer than liquid (overnight reverse repo only). Slightly lower return (~6-6.5%). For 1-week parking, overnight is right. For 1-12 months, liquid wins.
Tax difference between liquid fund and FD?
Post Apr-2023 changes: both taxed at slab rate, regardless of holding period. Earlier liquid had LTCG benefit at 20% with indexation — that advantage is gone.