Liquid fund tax treatment: holding period determines short-term slab taxation or long-term flat-rate taxation with differing indexation rules. Definition of Liquid fund for Chapter XII-E ties eligibility to mutual fund schemes classified by the securities regulator. Tax consequences turn on the holding period: short-term gains are added to total income and taxed at slab rates; long-term gains fall under a separate flat tax regime with differing indexation availability depending on the investment date. Dividends are taxable at the recipient's slab rate and are subject to tax deduction at source when they exceed the statutory threshold.