Investors, especially HNIs, used to park their short-term funds in these funds to gain from the tax advantage. Though equity funds will now be subjected to LTCG tax and DDT, experts say the arbitrage funds are still the best option to park short-term funds. While debt funds investors pay a total DDT of 29.12% after 1 April, it is only 10.4% for equity arbitrage funds. "The tax arbitrage differential will come down, but equity arbitrage funds will still remain a good option for short-term investments," says Raghvendra Nath, MD, Ladderup Wealth Management. Besides, the sudden increase in stock market volatility, triggered by the imposition of the LTCG tax and DDT on equities, is good news for arbitrage funds.

Source: Economic Times February 12, 2018 00:56 UTC