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The government on Tuesday proposed a new scheme offering tax-free interest on depositing the yellow metal with banks. The idea is to mobilise idle gold worth up to Rs 60 lakh crore held by households and institutions.
According to the draft gold monetisation scheme, there will be incentives for banks, too. While individuals and institutions could deposit even 30 grammes of gold, the interest earned on these deposits would be exempt from both income tax and capital gains tax.
Here’s a look at the gold monetisation scheme and how it works.
What is gold monetisation?
Announced by Finance Minister Arun Jaitley in his 2015-16 Budget speech, the scheme aims to bring gold lying idle with households and institutions into the market. The finance minister had said that stocks of gold in India were estimated at over 20,000 tonnes but these were mostly neither traded nor monetised. The scheme facilitates individuals and institutions to deposit their gold with banks for a minimum of one year and earn interest on it.
How does the scheme work?
· Holders could open gold savings account with banks after their metal is valued by a BIS-approved hallmarking centre
· If a customer deposits 100 grammes of gold and gets one per cent interest on it, he will redeem 101g on maturity
· The minimum quantity a gold holder can deposit with banks is 30g; the interest rate on it is to be determined by the bank concerned
· The gold deposited with banks will be lent to jewellers for interest; the rate charged from borrowers is a little higher than that paid to customers
· Customers can choose whether they want to take cash or gold on redemption; the preference has to be stated at the time of deposit
· Interest earned on the gold or appreciation in its value will not attract capital gains tax
