Arbitrage Funds: The Tax-Smart Place to Park Idle Cash

Arbitrage funds are taxed as equity, not debt — a big edge for 30% slab investors parking cash beyond a year

Returns come from the cash-futures price gap, so they barely move with the market — risk sits near a liquid fund

Hold over 12 months and gains above ₹1.25 lakh are taxed at just 12.5%, versus your full slab on a liquid fund

Mind the exit load: most charge a small fee if you redeem within 15-30 days

Best for surplus money you'll need in 6-18 months, not for emergency cash you might pull tomorrow