Gold monetisation plan offers tax-exempt interest

Draft note says scheme to be exempt from income tax, capital gains and wealth tax

Seeking to mobilise gold held by households and institutions, the government on Tuesday released a draft scheme under which a person or entity can earn interest by depositing the metal with banks.

To make the scheme attractive to households, the interest earned on it will likely be exempt from income tax, wealth tax, and capital gains tax. As per the draft guidelines, minimum gold deposit is proposed at 30 grammes. 

India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of the metal each year. The stock of gold in India that is neither traded nor monetised is estimated to be over 20,000 tonnes.

A person or institution holding surplus gold can get it valued from BIS-approved hallmarking centres, open a Gold Savings Account in banks for a minimum period of one year and earn interest in either cash or gold units, the draft said.

The Finance Ministry has sought comments from stakeholders on the draft gold monetisation scheme by June 2.

The gold monetisation scheme, which is proposed to be initially introduced only in selected cities, was announced in the Budget this year by Finance Minister Arun Jaitley.

"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," Jaitley had said.

The scheme is aimed at mobilising idle gold held by households and institutions, provide a fillip to the gems and jewellery sector and reduce reliance on import of gold over time to meet the domestic demand.