Why are the returns on liquid ETFs like Liquidbees, DSP Liquid ETF, and ICICI Liquid ETF lesser than the returns shown on their websites?
Before the 2020 budget, the returns on liquid ETFs were subjected to a Dividend Distribution Tax (DDT) of 28.84%. The dividends were paid out after deducting DDT. However, the historical returns shown on their websites were pre-DDT.
DDT was abolished post the budget and the dividends are now taxable in the hands of the investors at their income tax slab rate. If the dividends cross ₹5,000, an additional TDS of 10% is applicable.
To learn more about Liquid ETFs and Liquid BeES, see Everything you need to know about Liquidbees and Liquid Exchange Traded Funds (ETFs).