SBI Mutual Fund Bandhan SWP
SBI Mutual Fund Bandhan SWP

SBI Mutual Fund introduced a tax efficient option for its customers, Bandhan SWP (Systematic Withdrawal Plan) which allows you to withdraw a fixed amount regularly from your existing investments in eligible open ended mutual fund schemes of SBI utual fund. The amount can be directly credited to the bank account of your immediate family member. The announcement comes on the back of a 10 per cent tax levy on distributed income from equity-oriented mutual funds as well as 10 per cent tax on long-term capital gains exceeding Rs 1 lakh from equities.

The facility would be offered to both new and existing SBI mutual fund investors who can opt for it to provide a monthly sum of money from their investment in a growth option of an open ended mutual fund scheme to either a parent, sibling or child.

What is SBI Mutual Fund – Bandhan SWP ?

SBI Mutual Fund – Bandhan SWP is a facility that helps you provide regular pay-outs to your eligible family members (parent, sibling, spouse or child) from the growth option of your investment in eligible open-ended schemes of SBI Mutual Fund.

How SBI Mutual Fund – Bandhan SWP works ?

Follow these steps to start Bandhan SWP:

  • Choose scheme – Select your existing or new investment under the growth option of eligible open ended schemes.
  • Initiate Bandhan SWP – Start your Bandhan SWP facility specifying beneficiary details, withdrawal amount, duration and other details.
  • Submit documents – Submit beneficiary documents (like Address Proof, ID proof, Relation proof and Bank account proofs).
  • The amount will be credited to beneficiary’s bank account on respective date.
Also Read ►   Securities Transaction Tax (STT) in India

What are benefits of Bandhan SWP ?

Here are the following benefits of Bandhan SWP to the investor.

  • Regular cash flows to loved ones.
  • Tax efficient solution – As Fund Transfer to immediate family member as it is considered as a gift under the law and does not attract any taxation. SWP is more beneficial than a dividend payout solution.
  • Long term wealth creation opportunity.

Minimum amount to payout using Bandhan SWP

Amount of payout will be minimum ₹ 5000/- and in multiples of ₹ 1/- thereof.

Documents Required for Bandhan SWP

  • Application form – Download it here
  • If beneficiary is KRA complaint, acknowledgement copy is required. Else investor should submit relevant verifiable documents evidencing proof of identity and proof of address.
  • Proof of relationship such as Passport, PAN card, Birth Certificate, SSC / Degree certificate, Marriage Certificate, etc., wherein the name of the specified beneficiary family member is mentioned.
  • Cancelled cheque leaf of the Bank account or Copy of Bank Statement/Passbook of the beneficiary family member.
  • The unit holders opting for the facility shall take the prior written consent from the beneficiary family member for sharing the pay-out through SWP and it shall be deemed that the unit holders have obtained such consent. In case of any objection received by us from the beneficiary family member on the SWP mandate being credited to his / her Bank account under the facility, the unit holder will have to produce the written consent from the beneficiary family member within 30 days, failing which the facility shall be discontinued with immediate effect.
Also Read ►   Securities Transaction Tax (STT) in India

How to cancel existing Bandhan SWP ?

The unitholder has the option to cancel the facility anytime by submitting cancellation request to SBI Mutual Fund / SBI Funds Management Private Limited or CAMS (R&T) office at least 7 days prior to the next SWP date.

What are taxes that you will have to bear ?

Withdrawal from an equity oriented scheme

  • If the withdrawals are within first year of investment – Short term capital gain will be applicable only on the gain/appreciation portion of the withdrawal amount
  • If the withdrawals are after one year of investment – As per the prevailing tax rates, long-term capital gains on equity oriented funds are exempted from tax

Note : In Union Budget 2018, it has been proposed to introduce Long Term Capital Gains (LTCG) on equity oriented mutual fund schemes. LTCG from sale of equity shares and equity mutual fund schemes are proposed to be taxed at 10%, if an individual’s total capital gains cross Rs1 lakh. Currently, there is no LTCG tax if one holds the equity mutual fund units for more than a year. The Union Budget 2018 has proposed that all gains up to January 31, 2018 will be grandfathered. Only the Gains that would arise after January 31, 2018 would be considered. Education Cess is also proposed to change to 4%.

Please consult your financial advisor/ tax advisor before taking any decision of investment.

Withdrawal from a debt oriented scheme:

  • Withdrawals within three years of investment – Short term capital gain will be applicable only on the gain/appreciation portion of the withdrawal amount
  • Withdrawals after three years of investment – long-term capital gain tax will be applicable only on the gain/appreciation portion of the withdrawal amount
Also Read ►   Securities Transaction Tax (STT) in India

This is on basis of current tax laws. If there is any change, the same will be applicable to Bandhan SWP facility.

Please consult your financial advisor/ tax advisor before taking any decision of investment.

Bandhan SWP – Taxes that beneficiary will have to bear

No Gift tax as per prevalent tax laws. However, tax on any (interest) income generated on the Bandhan – SWP amount will be borne by the beneficiary depending on his tax liability.

4 COMMENTS

  1. I have a question here. If I like to continue Bandhan SWP for 10 years, will I need to pay monthly Rs.5000/- for 10 years?
    Kindly help

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