We all want to ensure safety and smooth cash flow for our loved ones. To give income benefits to family members, you can invest in the SBI Mutual fund Bandhan SWP.
Sometimes, giving full control of money to the beneficiary ( chosen family member ) is not a viable option , may be because of many unforseen constraingt. In such cases SBI Bandhan SWP facility comes in handy.
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What is a Systematic Withdrawal Plan/ SWP ?
Systematic Withdrawal Plan/ SWP is a mutual fund facility, wherein one can withdraw monthly income from mutual funds.
Read more about How SWP Works in Mutual Funds – with Example
What is Bandhan SWP SBI?
SBI Mutual Fund – Bandhan SWP is a facility that helps you provide regular payouts to your eligible family members.
SBI Bandhan SWP allows regular income ( SWP ) to chosen family members, while you have full control of your money. The tax benefit and taxation liability are on you and the monthly payout in the beneficiary account, isn’t it great?
Bandhan SWP is a Systematic Withdrawal Plan (SWP) that allows you to withdraw a fixed amount regularly from your existing investments or lumpsum deposit money.
Money is credited to the bank account of your spouse, parents, children or siblings, thus allowing you to give financial support to your loved ones in a seamless and hassle-free way.
How Bandhan SWP Works
- Choose Your Scheme -Select from your existing or new investment (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 Proof of Address, Proof of Identity, Relationship Proof and Bank Account Proof).
- Give Confidence-Inflows come to the beneficiary’s bank account on respective dates
Benefit of Bandhan SWP SBI
- Simple & effective way to provide regular income to a family member
- Money control is in your hand.
- No need to give control to the family member
- Inflation-adjusted returns
- Higher return than traditional investments
- Tax part lies on you
- You can close the SWP facility anytime.
- Highly Liquid- You can withdraw, shift, or transfer the amount anytime.
Who can be the beneficiary?
Only your family member can be a beneficiary.
Eligible beneficiaries include
- child / sibling aged 15 years and above
- spouse
- parents of the investor
- The beneficiary availing the facility should be a resident individual.
What are the documents required?
The beneficiary should be KYC Compliant. Or otherwise, submit proof of identity and proof of address.
- CProof 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.Prior written consent from the beneficiary for sharing the pay-out through SWP.
How do I cancel an existing Bandhan SWP?
To cancel existing Bandhan SWP anytime via submitting a cancellation request to SBI Mutual Fund or CAMS (R&T) office at least 7 days before the next SWP date.
How withdrawals will be taxed?
If you are withdrawing 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 upto Rs 1 lac on equity-oriented funds are exempted from tax
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 making any decision on investment.
If you are withdrawing from a debt oriented scheme:
Withdrawals within three years of investment – The capital gain will be applicable only on the gain/appreciation portion of the withdrawal amount
This is basis the current tax laws. If there is any change, the same will be applicable to Bandhan SWP facility.
What are the taxes that the beneficiary will have to bear?
There is no Gift tax as per the 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.
What is the minimum SWP amount in bandhan SWP?
The amount of pay-out will be minimum Rs.5000/- and in multiples of Rs.1/- thereof. Minimum number of monthly instalments would be 12.
What should be SWP ( monthly payout) frequency?
You can select any one of the given dates: 1st/ 5th/ 10th/ 15th/ 20th/ 25th/ 30th (last working day in case of February). Only monthly option is available as the Bandhan SWP.
If you have started Bandhan SWP, and in between switched the entire amount to another SBI fund. What will happen?
If you redeem or switch all the units of the scheme in which have initiated Bandhan SWP, then the facility will be discontinued.
If you plan to continue SWP in the new scheme, you need to submit a new application for starting Bandhan SWP in the name of the beneficiary from the new scheme.
Live Example
