2 mutual fund schemes which offer tax efficiency plus debt-MF like returns

economictimes.indiatimes.com:

Debt mutual funds have been an instrument of choice while giving exposure to fixed income assets in investment portfolios. Tax efficiency was one of the major reasons for this.
However, from April 1, 2023, there has been a change in income tax laws for mutual fund units bought on or after this date. Capital gains from units of any Mutual Fund (MF) scheme that has invested after this date and has only up to 35% assets in Indian equity would now come under Short-term Capital Gains (STCG) tax regime, irrespective of the duration of the investment. STCG tax is payable at one's applicable income tax slab rates.

Capital gains from units of those mutual fund schemes that have invested 35%-65% in Indian equity in the MF scheme would qualify for long-term capital gains (LTCG) after 36 months of holding period. LTCG tax of 20% would be applicable, after indexation, for this category.

This means that capital gains from units of pure debt funds would come under Short-term capital gains regime irrespective of the holding period and tax payable will be as per one's income tax slab rates. This is a major disadvantage. However, there are two mutual fund categories that offer returns similar to debt mutual funds in a tax efficient manner.

Investors looking for twin engines of quality and growth.

These mutual fund categories are — Arbitrage funds and Hybrid funds. However, an investor must consider two scenarios before investing in these mutual fund categories. The first one is where they require money for near-term goals and expenses. They need the investment to be stable and liquid. Investment returns are not a major consideration here.
One of the best candidates for near term goals would be an Arbitrage fund which has risk similar