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One can deposit as low as 30 grams of gold under the new Gold Monetisation Scheme once the draft is approved for implementation. The scheme aims to bring out around 20,000 tonnes of gold lying idle with households.
The Finance Ministry has put up draft of the scheme in the public domain and invited comments. Comments can be sent at www.mygov.in. by June 2. Based on the views, the new scheme will be finalised and made operational. The scheme was announced in the Budget which aims to replace both the present Gold Deposit and Gold metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold.
Also read: Put idle gold to work
“The minimum quantity of gold that a customer can bring in proposed to be set at 30 grams, so that even small depositors are encouraged. Gold can be in any form (bullion or jewellery),” the draft said. The scheme will give interest as well as tax benefits. The depositors will have the option to take cash or physical gold at the time of maturity.
How the gold schemes announced in the Budget work
Process
The draft prescribes the process for participating in the scheme. Interested customer need to go to purity testing centres first. There are around 350 Hallmarking Centres spread all over the country which will act as the Purity Testing Centres. These centres will examine the purity, melt the gold and deposit it there itself. At every stage, the person will have to take his/her gold back. These centres will take up to 5 hours to weigh, melt the gold, verify the purity and issue the certificate against present practice of 90 days. However, the customer will have to pay the charges, if he is taking back the melted gold in the form of gold bars and not depositing.
In case of deposit, bank will pay the charges. Post deposit, the customer will be issued a certificate. Based on this certificate, bank will open a Gold Savings Account. Interest on such account will be payable after 30/60 days of the opening of account. Banks will be free to decide the interest. Both principal and interest will be valued in gold. For example, if a customer deposits 100 grams of gold and gets 1 per cent of interest, then, on maturity, he has a credit of 101 grams.
Tax exemptions
Minimum tenure of such account will be one year with an option of rolling over in multiples of one year. The draft says that exemptions from Capital Gain Tax, Wealth Tax, and Income Tax are likely to be made available after ‘due examination’. Gold deposited under the scheme can be lent to the jewellers for their use, this reducing the dependency on import. India imports nearly 1000 tonnes of gold every year.
Earlier, one Gold Deposit scheme was introduced in 1999 with an aim to mobilise the idle gold in the country and put it into productive use. However, it has not been very successful and less than 10 tonnes of gold has been collected. There are many reasons for disappointing performance which include lower interest rate and time taking process for issuance of certificate.
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