Should I start STP from Arbitrage mutual funds after one year

Yes, you are right! The profit made from liquid funds (within 3 years from the date of investment) is taxable and will be treated as short term capital gains. The gains will be added to your income and taxed at the tax slab applicable to you.

Doing STP from Arbitrage fund after one year is a good idea in terms of tax efficiency (Tax treatment of these funds are of equity)! Profit upto Rs 1 Lakh a year is totally tax free as long term capital gains! But our point is, when you are doing STP, saving tax on the lump sum investment is more important or doing rupee cost averaging when the markets are volatile? This decision you will have to take!

Did you know the ideal investment tenure for doing STPs? DO read the following -

https://www.advisorkhoj.com/iciciprumf...

https://www.advisorkhoj.com/iciciprumf...

Suggest you to go through the followings -

https://www.advisorkhoj.com/licmf...

https://www.advisorkhoj.com/mutual-funds-research...

Wishing you good luck and thanks for connecting to Advisorkhoj!