BackDraft guidelines on gold monetisation released; interest to be tax-exempt
Minimum gold deposit is proposed at 30 gms and the interest earned on it would be exempt from income tax as well as capital gains tax
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New Delhi: Seeking to mobilise gold held by households and institutions, govt on Tuesday came out with a draft scheme under which a person or entity can earn interest by depositing the metal with banks.
As per the draft guidelines, minimum gold deposit is proposed at 30 gms and the interest earned on it would be exempt from income tax as well as capital gains tax.
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 2 June.
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.
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.
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.
Under the proposed scheme, the bank interest to the customers will be payable after 30/60 days of opening of the Gold Savings Account.
“The amount of interest rate to be given is proposed to be left to the banks to decide. Both principal and interest to be paid to the depositors of gold, will be ‘valued’ in gold," the draft norms said. It added, as example, that if a customer deposits 100 gms of gold and gets 1% interest, then, on maturity he has a credit of 101 gms.
With regard to redemption, the guidelines said that customers will have the option of getting it back either in cash or in gold, which will have to be exercised in the beginning itself that is, at the time of making the deposit.
The tenure of the scheme has been proposed at a minimum 1 year and with a roll out option in multiples of one year, it
said, adding that it would be like a fixed deposit, breaking of lock-in period will be allowed.
“To incentivise banks, it is proposed that they may be permitted to deposit the mobilised gold as part of their CRR/SLR requirements with RBI. This aspect is still under examination," it said.
Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are mandatory requirement which banks have to follow as per RBI directive.
Elaborating other benefits of the scheme, the guidelines said, banks may sell the gold to generate foreign currency. The foreign currency thus generated can then be used for onward lending to exporters or importers. Bank may convert mobilised gold into coins for onward sale to their customers and can be used for lending to jewellers, it said.
The government is also planning to commence work on developing an Indian Gold Coin, which will carry the Ashok Chakra on its face.
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