SBI Mutual Fund has introduced Bandhan Systematic Withdrawal Plan, a tax-efficient option to provide a minimum of ₹5,000 a month for one year to an immediate family member by redeeming units.

Comparable to reverse mortgage, it allows an investor to withdraw a specified sum of money on periodic basis from the investment made in the growth option of an open-ended scheme. The redeemed money can be transferred to the investor’s spouse, parent, child or sibling as gift which does not attract any tax.

Capital gains tax will be levied only on the profit, that is, the difference between the acquisition cost and the redeemed value. The tax outgo will increase progressively as the value of the asset increases.

Financial support, security

Currently, UTI MF has a similar systematic withdrawal plan. Bandhan Systematic Withdrawal Plan can be opted free of cost. An investor should have units worth at least ₹60,000 to opt for the Bandhan SWP as the minimum monthly transferable amount is ₹5,000.

Anuradha Rao, Managing Director & CEO, SBI Mutual Fund, said Bandhan SWP not only provides financial support to loved ones but also makes them confident and financially secure. In fact, SWP is the most tax-efficient solution for individuals in the current tax regime, she said.

DP Singh, Executive Director, said an individual approaching retirement can choose to start Bandhan SWP from the retirement corpus to create a regular stream of monthly cash flow for his family members.

The current upheaval in the market should not bother long-term investors and they should consider the fall in market valuation to invest more as the country’s fundamental economic growth prospects are still strong, she added.

Navneet Munot, Chief Investment Officer, said Bandhan SWP is a step to bring in behavioural change among investors to move from a short-term approach to long-term wealth creation.

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