In life, there are times your family members require your financial assistance. In such cases, giving money in one go isn’t the most helpful approach. Your loved ones might need your help for an extended period of time and on regular basis.
Under such circumstances, you can think of dedicating a Systematic Withdrawal Plan (SWP) to a family member. Mutual fund houses have started offering unique options to transfer money to your family members.
SWP lets you withdraw a fixed sum of money from a mutual fund scheme regularly.
Recently, SBI Mutual Fund introduced a new plan – Bandhan SWP.
It offers monthly cash flow from an individual’s mutual fund investments to their immediate family member.
In February 2018, SBI Mutual Fund launched Bandhan SWP.
It is a unique facility that allows you to systematically withdraw money from your investments with the fund house and transfer it directly to the account of a beneficiary (an immediate family member).
This is a unique solution offered by SBI Mutual Fund, that helps you make regular payouts which the beneficiary can use for monthly sustenance, additional financial support, lifestyle maintenance or recurring expenses.
In Bandhan SWP, you can have any immediate family member as the beneficiary of the SWP. It is also a tax-friendly investment solution.
If you are not an existing investor of SBI Mutual fund, follow following steps
Step 1: First invest in an SBI Mutual Fund scheme especially in the growth option of any open-ended fund and then opt for the SWP facility.
Step 2: Specify beneficiary details, withdrawal, duration and other details of Bandhan SWP. Remember:
Step 3: KYC documents of the beneficiary, including proof of the relationship between investor and beneficiary needs to be submitted.
Step 4: Submit a canceled cheque leaf of the bank account or copy of bank statement/passbook of the beneficiary, for crediting SWP payments to the beneficiary’s bank account.
Step 5: Inflows come to the beneficiary’s bank account on the specified date.
If you are an existing investor of SBI Mutual Fund growth plan, you can directly use Bandhan SWP facility.
The 3 major benefits of Bandhan SWP are:
With the launch of Bandhan SWP, an investor can give a fixed amount to their loved ones at fixed intervals. Moreover, the frequency and amount of withdrawal can also be selected by the investor.
The amount can be directly credited to the bank account of investor’s spouse, parents, children or siblings, thus allowing you to give financial support to your loved ones in a seamless and hassle-free way.
At the launch of Bandhan SWP, DP Singh, Executive Director and Chief Marketing Officer (Domestic Business), SBI Mutual Fund said, ‘Bandhan SWP’ is a tax-efficient solution as any fund transfer to immediate family members as it is considered as a gift under the law and does not attract any taxation.
That means the money transferred to your beneficiary family member is treated as a gift in case of Bandhan SWP.
And under current tax laws in India, there is no gift tax if the beneficiary receives the gift from a relative.
However, if the money transferred to your beneficiary family member earns interest, then the interest will be taxable as per the income tax rate of the beneficiary.
This new SWP not only provides regular cash flows and tax benefit but also gives investors long-term wealth creation opportunity if invested in right growth SBI mutual funds.
With the launch of Bandhan SWP, an investor can give a fixed amount to their loved ones also, at fixed intervals. The facility can be used extremely well by middle-aged investors and those approaching retirement.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.