Particulars | Arbitrage Fund | Fixed Deposits | Saving Account |
Return on Investment | 7-9% | 7-9% | 3-4% |
Tax on Earnings | Tax Free if held for more than 1 year. 15% tax if held for less than 1 year | 30.90% | 30.90% |
Effective return after tax | 7-9% | 5.5 - 6.3% | 2-3% |
Complexity level | A bit complicated for layman to understand | Very easy to understand | Very easy to understand |
Suitable for | 1 to 2 years of investment with tax free returns, high liquidity and better returns than saving bank account and FD | A person in low income tax slab. | A person in low income tax slab. |
*The above chart has been prepared assuming that the investor is in the highest tax slab. |