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

Arbitrage funds are taxed as equity, so gains after 12 months attract just 12.5% — far below your slab on an FD

They earn from the gap between cash and futures prices, not from market direction, so risk is low

Returns are not guaranteed and shrink when the cash-futures spread narrows in dull markets

Best for parking 3 months to a couple of years of surplus if you're in the 30% bracket

Use the growth option and watch the exit load before redeeming within a month