SBI MF introduces tax-friendly systematic withdrawal plan

Thinkingfunda SBI MF introduces tax-friendly systematic withdrawal plan

HIGHLIGHTS

  • SBI Mutual Fund has introduced a new plan which offers monthly cash flow from an individual’s mutual fund investments to their immediate family member
  • SBI Mutual Fund MD and CEO Anuradha Rao has dubbed the plan as ‘the most tax efficient solution for individuals in the current tax regime’

MUMBAI: Providing a tax efficient option for its customers, SBI Mutual Fund on Thursday announced the introduction of ‘Bandhan SWP (Systematic Withdrawal Plan)’ which offers monthly cash flow from an individual’s mutual fund investments to their immediate family member.

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, spouse or child.

The existing investors who have their investments under dividend payout and dividend reinvestment option may also avail this facility by switching their investments to the growth option. The minimum withdrawal amount is Rs 5,000 per month for a period of 12 months.

SBI Mutual Fund executive director and CMO D P Singh told reporters here that ‘Bandhan SWP’ is 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. The SWP is more beneficial than a dividend payout option.

Echoing the view, SBI Mutual Fund managing director and CEO Anuradha Rao said, “SWP is the most tax efficient solution for individuals in the current tax regime”.

Singh also noted that currently the option can be availed for a single relation, however, going forward it would be offered for multiple relations as well.

“The facility can be used extremely well by middle-aged investors and those approaching retirement,” he added.

The announcement comes on the back of a 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.

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