Arbitrage Funds: The Tax-Smart Place to Park Cash

Arbitrage funds earn from the gap between spot and futures prices, not from market direction, so they stay low-risk.

They're taxed as equity: 20% short-term, 12.5% long-term above Rs 1.25 lakh, not at your slab.

For 30% slab investors, that tax edge makes them beat liquid funds and FDs for parking money.

Returns float with market volatility, roughly 6-7% a year, and aren't guaranteed like an FD.

Watch the exit load window (often up to 30 days) and treat them as 3-12 month parking, not core wealth.