Cash Futures Arbitrage on WebNotes

Parag Parikh Arbitrage Fund

Sat, 16 May 2026 00:00:00 +0000

The Parag Parikh Arbitrage Fund is an open-ended arbitrage scheme of PPFAS Mutual Fund , launched on 27 October 2023 by PPFAS Asset Management Private Limited following a new fund offer that ran from 23 October 2023 to 27 October 2023. It is the fifth open-ended scheme in the PPFAS Mutual Fund product line, after the flagship Parag Parikh Flexi Cap Fund (24 May 2013), the Parag Parikh Liquid Fund (9 May 2018), the Parag Parikh ELSS Tax Saver Fund (4 July 2019), and the Parag Parikh Conservative Hybrid Fund (28 May 2021). The scheme is benchmarked to the Nifty 50 Arbitrage Total Return Index.

Parag Parikh Arbitrage Fund Taxation

Sat, 16 May 2026 00:00:00 +0000

The Parag Parikh Arbitrage Fund is the PPFAS Mutual Fund arbitrage scheme, launched on 27 October 2023 following an NFO that ran from 23 October 2023 to 27 October 2023. The scheme is benchmarked to the Nifty 50 Arbitrage Total Return Index and operates under the SEBI Arbitrage Fund category mandate defined in the SEBI scheme rationalisation circular 2017 , which requires a minimum 65 per cent in equity and equity-related instruments, primarily through cash-futures arbitrage strategies.

Taxation of arbitrage funds (equity-oriented)

Tue, 12 May 2026 00:00:00 +0000

Taxation of arbitrage funds in India mirrors the taxation of equity-oriented mutual funds because SEBI mandates that arbitrage funds maintain at least 65% of their assets in equity (through simultaneous long cash and short futures positions), placing them within the equity-oriented classification for income-tax purposes. Capital gains on arbitrage fund units are taxed under Section 111A (STCG at 20%, effective 23 July 2024) if held for 12 months or less, or under Section 112A (LTCG at 12.5% above Rs 1,25,000) if held for more than 12 months. This tax treatment makes arbitrage funds materially more efficient than liquid funds or ultra-short-duration debt funds for investors in higher income-tax brackets, especially for parking short-term surpluses for periods of three months or more.