Da-I appreciate your working and arriving at decision. But consider below points before jump into.
- When your requirement is short term requirement, then the highest importance must be towards preserve your principal, liquidity and lesser tax outgo.
- I fully agree that if you are into 30% tax bracket then opting dividend option will be better than opting growth option. But stick to liquid funds or ultra short term funds. Don’t go beyond that.
- But selecting Arbitrage Funds for less than a year or equal to year may not be a good idea. Because in some instances, arbitrage funds provided some negative returns also. However, if holding period is more than a year, then think of Arbitrage funds. Also, dividends may be tax-free. But they will not provide regular dividends unlike debt funds.
- Avoiding TDS does not mean that avoiding your tax liability. You have to pay the tax on such incomes according to taxation. Hence, don’t concentrate too much on TDS factor.
In my view, if your holding period is less than a year, I suggest you to stick to FDs and Liquid Funds. No Arbitrage Funds.