Gold Monetization Scheme

Hi Friends,

I hope you're doing well and staying safe.

I'd like to provide my reading into this topic. Gold Monetization Scheme is introduced by Government of India in 2015. Under this scheme one can deposit their gold in any form in a GMS account to earn interest as the price of the gold metal goes up.

There are 3 types of deposits under GMS:

Short Term Gold Deposit (STGD)
Medium Term Gold Deposit (MTGD)
Long Term Gold Deposit (LTGD)

The gold monetization schemes are:
1. Mobilise idle gold
2. Earn interest
3. Avail secured storage
4. Enjoy tax benefit
5. Get flexibility on redemption
6. Reduce the government's reliance on gold imports

Present Scheme:
Finance Minister Arun Jaitley, in the 2015-16 budget, had announced the development of a financial asset - sovereign gold bond - as an alternative to the precious metal, and the borrowing through issuance of the bond will form part of market borrowing programme of the government.

The gold bonds are denominated in multiples of gram(s) of gold with a basic unit of one gram while the minimum investment limit is two grams.

The maximum subscription is 500 grams per person per fiscal (April-March) and for joint holders, the limit will be applied on the first holder.

As per the scheme, the gold bonds will be sold only to resident Indian entities including individuals, Hindu undivided families, trusts, universities, and charitable institutions.

The issue and redemption price are in Indian rupees fixed on the basis of the previous week's (Monday-Friday) simple average of the closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd.

As per the scheme, the bond tenure will be eight years with exit option beginning the fifth year onwards. The bonds will also be tradable in the bourses.

The rate of interest will be 2.75 per cent per annum payable semi-annually on the initial value of the investment.

Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

As to the tax treatment, interest on gold bonds will be taxable as per the provision of Income Tax Act, 1961 and the capital gains tax shall also remain same as in the case of physical gold.

Commission for distribution shall be paid at the rate of one per cent of the subscription amount.

Having said that, I've read and found that only 400 grams have been deposited so far under the gold deposit scheme and the government has agreed to review the scheme and open more centres for gold testing and depositing in banks, says a report.

Quoting, Anil Sankhwal, the northern regional chairman of Gem and Jewellery Export Promotion Council (GJEPC), the reports says, a shortage of centres to assay the gold being put on deposit is a problem that the government has agreed to address.

After meeting with Finance Ministry officials, Sankhwal told reporters that only 400 grams have been deposited so far (under the gold deposit scheme) and the government has agreed to review the scheme and open more centres for gold testing and depositing in banks.

Hence, I believe that if the scheme is reviewed again then definitely it would be great step for the Indian people and to increase the GDP of the country.

Thanks

Hello everyone,

Myself Sohan our topic is the monetization of gold. In my opinion monetization of gold is a very good initiative by the government of India. It was launched under PM Narendra Modi government. Under this scheme, people can deposit gold in form of jewelry, coins, etc in the bank and they will get interested on this basis of deposition annually. Under this scheme minimum 30 gm of gold should be deposited and the is no upper bar limit on deposition. People can be deposited for a different time period such as short term (1-3 yr), medium-term (3-5 yr), and long-term (more than 5 yr). They can withdraw at any time but they have to interest before the time.

Some of the benefits of GM:

1. It ensures the safety of gold as it saves from robbed.
2. It helps to earn some money in the form of interest.
3. It reduces the government from import of gold.
4. It helps to save the mobilization of gold to foreigners.
5. It helps the people from tax.

Hii friends.

The topic for group discussion is "GOLD MONETIZATION".

The scheme of gold monetization is a big advantage of the Government. This Monetization Scheme will help both people and government. People can monetize their gold by depositing it with a bank as a term deposit and obviously it is better to keep gold in bank than in the house. Bank will take all responsibility about the gold so no worrying the theft. Additionally, A bank is not required to compensate you if your gold is stolen or destroyed while it is in a safe deposit box. Before this scheme, to keep the gold in the bank, they used to take a high charge on the gold, but now the bank are giving money for deposit the gold.

Under GMS minim gold deposit at any time is 30 grams of gold (bar, coins, jewellery excluding stones and other metals).

The minimium deposite at any time shall be 10 grams of raw gold and there is no maximum limit for deposit under the scheme.

Gold monetisation seems to profitable.

Because in India for an employee or farmer when it comes to saving, most of us are not masters in real estate and share market and also because of all other formalities and technicalities, we prefer either FD, or buying gold, to just counter or cope up with yearly inflation.

So, gold monetisation does not only provides the extra rate of interest along with the increasing value of gold.

But the question is how much it will be successful in India. So I believe that in India gold is attractive in two ways.

1) to design jewellery and.

2) keep it to mask black money.

People who are obsessed with jewellery will prefer to invest in gold in the form of jewellery.

And for those who are masking their black money, hardly there is any chance of depositing the same in the bank.

And the uncertainty of the survival of the banks too. Afraid if they keep our gold lock.

Thanks.

Hello everyone.

The gold monetization scheme is launched by honorable prime minister Modiji in 2015. Under this scheme, we can deposit gold in the form of jewelry, coins, raw gold, etc in banks and banks provide safety to our gold as well as gives interest. Before the gold monetization scheme banks used to charge on deposit of gold from us. But now the condition is changed.

There are 3 ways to deposit our gold in the bank as follows.

1. Short-term gold deposit (1-3 yrs).
2. Mid-term gold deposit (3-5yrs).
3. Long-term gold deposit (more than 5yrs).

Benefits of this scheme-.

1. Provides security to our gold so no risk.
2. They give interest to us.
3. Saves our tax.
4. Reduces the import of gold by the government from foreign countries.

Overall it's a very great initiative taken by the government.

Thanks a lot!

In my view, gold monetization is a great initiative taken by the government. In India people of most regions have a habit of buying gold as a symbol of status, as a result, there is an increase in import of gold to India every year. Gold is like static liquid it won't help for countries economic growth. Monetization helps both society and people. In the present scheme, the government is providing interest at the rate of 2.25-2.5 % depending on the period and value of gold deposited. We won't get anything if we store gold in our homes this scheme helps in getting interest from it and helps for countries GDP growth. Hence more awareness should be provided to people and scheme should be made succesful. Thank you.

Hello everyone,

In Indian homes, there were tons of gold is lying idle. Hence Government of India launched the gold monetization scheme to turn this gold into a productive asset. In 2015 Prime Minister of India launched this scheme which aims to mobile gold and uses it for the productive purpose it ultimately reduces the import of gold from other countries. This scheme also beneficial to Jewellers by allowing them to obtain loans. In 2015 and 2016 government also announced gold deposit schemes and gold metal loan schemes but these schemes are under the guidelines of RBI.

I am Vaishnavi. Our topic is on gold monetization as it was introduced in 2015.
We know that every coin has two faces as well as here gold monetization scheme is also having pros and cons. Let me talk what r the cons of gold monetization.

There will be lock in period in this scheme. Secondly, the gold which you deposited in bank cannot be given in the same form it will be given in gold bars. Finally there can be involvement of IT in this Scheme. Thank you

GMS allows the depositors of gold to earn tax free market determined interest income (denominated in gold but recoverable either in gold or in rupee [mandatorily in rupee if it is deposited for a medium or long term]) from the pure gold they deposit with banks in their "Gold Savings Accounts" and permits the jewelers to obtain their raw material -gold bars created from the melting of the gold deposited with the banks- as loans in their "Metal account".

Warm Regards to all,

In my view, gold monetization scheme is a great initiative by our Government as we can keep our gold in any form in Gold Monetization Scheme and earn interest as the price of the metal grows up.

It is a fantastic avenue to earn some return which otherwise was parked in Bank Lockers or homes.

From the point of view of Taxmann, its transfer is exempt vide Section 47 and any interest earned on it is exempt u/s 10 (15) (vi).