Your FD pays 7%.
You keep 4.8%.
Arbitrage funds are taxed as equity. Same stability. You keep 6.4%.
The headline rate is fiction.
A 7% FD is a 4.82% FD
Taxed every year on accrual. Even the compounding runs on the post-tax number.
Liquid funds barely help
Slab-rated since April 2023, however long you hold them.
Inflation takes the rest
Against mid-single-digit inflation, 4.8% is roughly break-even.
Not a bet on the market.
Where the return comes from
Buy the stock, sell its futures higher. On expiry the two converge. That gap is the return.
Why the risk is low
Every long position is hedged by a short. No net directional exposure.
Why it’s taxed as equity
65%+ in equity and derivatives makes it an equity-oriented scheme. Everything follows from that.
Three advantages,
one classification.
₹1.25 lakh exempt, every year
Per person, resetting each April. A family of four has ₹5 lakh of headroom.
We harvest so it’s never wasted12.5% flat above that
Not your slab. Roughly 60% less tax on the same rupee of gain.
FD at 30% slab: 31.2% · Arbitrage: 12.5%Buying a home? Section 54F
Redeem into one residential house and the gains can be exempt entirely.
Conditions apply — our CAs check your casePost-tax calculator
Assumptions
Gross scheme rates in. Everything out is after tax — slab plus 4% cess on FD and liquid, nil on arbitrage where gains stay inside the exemption. Surcharge not modelled.
| Year | FD | Liquid | Arbitrage |
|---|
All three, after tax.
| FD | Liquid | Arbitrage | |
|---|---|---|---|
| Return you keep | 4.82% | 5.06% | 6.40% |
| Tax on the gain | ₹1,20,237 | ₹1,26,879 | ₹0 |
| Tax-free allowance | None | None | ₹1.25 L a year |
| Getting your money back | 0.5–1% penalty | T+1 | T+1 |
| Lock-in | Yes | None | None |
| Exempt for a home purchase | No | No | Yes — 54F |
₹10 L · 5 years · 30% slab. Change it in the calculator.
Saving for a house?
This is the account.
Too soon for equity, too big for savings, too taxed in an FD.
₹40 lakh, 3 years
FD: ₹46.06 L. Arbitrage: ₹48.19 L. A ₹2.1 L difference — roughly your stamp duty. Assumes gains are held inside the annual exemption, across family PANs where needed.
And dates move
Break an FD early and you lose 0.5–1% on top of the tax. Arbitrage redeems in a day, penalty-free.
A Chartered Accountant,
not a chatbot.
A 15-minute call
Amount, timeline, slab. Sometimes arbitrage isn’t right for that money — we’ll say so.
We set it up
Scheme, KYC, and whose name holds the units — so the exemption multiplies across the family.
We harvest, every year
Book gains inside the exemption before the year closes. That’s how the bill stays at zero.
What’s this worth
on your money?
Your amount, your slab, a straight answer. Start in the app — a Chartered Accountant picks it up from there.
Rather talk first?
Free, no obligation, and nothing to buy on the call.
Fair questions
Is it risk-free?
How is 6.4% better than a 7% FD?
What is harvesting?
What if gains cross ₹1.25 lakh?
What does this cost me?
Is my data safe?
Mutual fund investments are subject to market risks. Read all scheme related documents carefully.
Full disclosures & assumptions
- Past performance is not indicative of future returns. The 6.25–6.5% range is an illustrative assumption based on recent category behaviour — not a promise, projection or guarantee.
- Arbitrage funds are not risk-free or capital-guaranteed. They are not bank deposits and are not covered by DICGC insurance. Returns depend on the cash-futures spread and can be flat or negative in a period.
- The nil-tax figure assumes gains are realised within your ₹1.25 lakh annual LTCG exemption and that harvesting is carried out. Gains beyond it are taxed at 12.5% long-term, 20% short-term.
- Tax treatment reflects our understanding of Indian law for equity-oriented schemes at the date of publication and is subject to change. Surcharge is not modelled. This is not tax advice.
- Section 54F relief is subject to statutory conditions and limits. Take specific advice before relying on it.
- Calculator outputs are illustrative and depend on the assumptions set. Exit loads, expense ratios and transaction costs are not modelled.
- MaxiMoney is operated by Value Garage Private Limited, an AMFI-registered mutual fund distributor (ARN 364940). Not a lender, NBFC or SEBI-registered investment adviser. We may earn a distribution commission on investments made through us.