Liquid funds are ideal to park money for a few days to a few weeks. You should consider investing in ultra short-term schemes if you are investing for a few months and up to a year.
Arbitrage funds look for the price difference between the cash and the derivative market to generate returns. As you can see the returns from these funds would depend on the arbitrage opportunities available in the market.
Both these funds are relatively safer and they may offer a marginally higher post-tax returns than bank deposits.
Though arbitrage funds do not invest directly in stocks, they are classified as equity schemes for the purpose of taxation. This give them an edge over liquid funds. If arbitrage funds are sold before a year, the short-term gains are taxed at 15 per cent. If these funds are sold after a year, investors do not have to pay any tax as long-term capital gains tax is nil.
If investments in liquid funds are sold before three years, the gains are treated as short-term gains and taxed as per the Income Tax slab applicable to the investor. If liquid funds are sold after three years, they qualify for long-term capital gains tax of 20 per cent with indexation.
Top 10 Tax Saving Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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