Extra tax due to FD

Extra income tax due to FD

Hey folks,
I just finished filing my ITR (AY 2025–26) under the new tax regime and got a bit of a disappointment.

Here’s my scenario:

• Salary: ~₹13.9L
• Dividend: ~₹2.3k
• Savings interest: ~₹1k
• FD interest: ~₹19.7k
• Total gross income = ~₹14.1L
• Standard deduction = ₹75k → taxable = ~₹13.35L

Tax came out to ~₹1.22L. Without the dividend + FD + savings interest, it would have been ~₹1.16L.
So basically, for an extra income of ~₹23k, I ended up paying ~₹5.8k tax (≈25%).

Question:
For emergency funds (6–9 months of expenses), what’s the most tax-efficient way to park money? I need safety + liquidity, but I don’t want to keep losing 25–30% of the already small FD interest to tax.

Options I’ve read about but not sure:

• Arbitrage funds / liquid funds (growth option)
• Debt mutual funds with indexation
• Just bite the bullet and keep FDs because safety > tax

Would love to hear how you guys handle this, especially if you’re also in the 20–30% slab.