- 09 Sep
Gold Monetisation Scheme (GMS)
The Gold Monetization Scheme comprises of the previousÂ 'Gold Deposit Schemeâ€™Â and theÂ 'Gold Metal Loanâ€™Â scheme, revamped and linked together in GMS.
Objective of RBI/Government
GMS, which modifies the existing 'Gold Deposit Scheme' (GDS) is intended to mobilise gold held by households and institutions of the country and facilitate its use for productive purposes, and in the long run, to reduce country's reliance on the import of gold.
Resident Indians (Individuals, HUF, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations and Companies) can make deposits under the scheme. The opening of gold deposit accounts will be subject to the same rules with regard to customer identification as are applicable to any other deposit account.
You need to hold Savings / Current Account with ICICI Bank before opening Gold deposit account for credit of interest on gold deposit in INR. In case you do not hold an account with us, you will need to open a Savings / Current Account after complying with the KYC norms.
Revamped Gold Deposit Scheme
The gold is accepted at the Collection and Purity Testing Centres (CPTC) certified by Bureau of Indian Standards (BIS). The deposit certificates are issued by banks in equivalent of 995 fineness of gold. The designated banks (ICICI Bank, Corporation Bank/Union Bank of India, Indian Overseas Bank, Punjab National Bank, State Bank of India, HDFC Bank, Yes Bank, Dena Bank/Bank of Baroda) accept gold deposits under the Short Term (1-3 years) Bank Deposit (STBD) as well as Medium (5-7 years) and Long (12-15 years) Term Government Deposit Schemes (MLTGD). While the former is accepted by banks on their own account, the latter is on behalf of the Government of India.
Interest:Â The amount of interest rate payable for deposits made for the short-term period Â is decided by the banksÂ on the basis of the prevailing international lease rates, other costs, market conditions etc. and the same is borne by the banks. For the medium and long-term deposits, the rate of interest is decided by the government, in consultation with the RBI from time to time and the same is borne by the Central Govt.Â Â
Redemption:Â For short term deposits and MLTGD, the customer will have the option of redemption of the principal at maturity in Indian rupee equivalent of the value of deposited gold at the time of redemption or in gold. However, any pre mature redemption of MLTGD will be in INR only. In case of STBD, any pre mature redemption shall be in Indian rupee equivaled or gold at the discretion of the designated bank. In case of redemption in gold, any fractional quantity (for which a standard gold bar/ coin is not available) would be paid in cash.
Interest in respect of STBD and MLTGD shall be denominated and paid in Indian rupee only.
Tax implicationsÂ on GMS shall be notified by the Central Government from time to time. However, it is clarified that Tax exemption, same as those available under GDS, would be made available to the customers, in the revamped GDS, as applicable. In this direction, the enabling notifications issued by GOI are:
(a) Exemption of interest earned on gold deposit bonds from Income Tax vide amendment to section 10(15)(vi) of the Income Tax Act by Finance Act 1999.
Exemption of various assets deposited in the scheme from Wealth Tax under Section Â of Wealth Tax Act as amended by Finance Act 1999.
(b) Exemption from capital gains made on the bonds though trading or at redemption from Capital Gains Tax under section 2(14)(vi) of Income Tax Act as amended by finance Act 1999.
Further, as per CBDT instructions No. 1916 dated 11thÂ May, 1994 in course of IT Search u/s 132, gold jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized by the authorities, but the tax penalties, as applicable will be levied.
Revamped Gold Metal Loan Scheme
Gold Metal Loan Account:Â A Gold Metal Loan Account, denominated in grams of gold, will be opened by the bank for jewelers. The gold mobilized through the revamped GDS, under the short-term option, will be provided to jewelers on loan, on the basis of the terms and conditions set-out by banks, under the guidance of RBI.
Delivery of gold to jewelers:Â When a gold loan is sanctioned, the jewelers will receive physical delivery of gold from refiners. The banks will, in turn, make the requisite entry in the jewelersâ€™ Gold Loan Account. Interest received by banks: The interest rate charged on the GML will be decided by banks, with guidance from the RBI.
Tenor: The tenor of the GML at present is 180 days. Given that the minimum lock-in period for gold deposits will be one year, based on experience gained, this tenor of GML may be re-examined in future and appropriate modifications made, if required.
Indian Gold Coin
The Indian gold coin is a part of the Gold Monetisation Programme. The coin is the firstÂ ever national gold coin minted in India and has the National Emblem of Ashok Chakra engravedÂ on one side and Mahatma Gandhi on the other side. The coins are available in denominations of 5, 10 and 20 grams. The Indian Gold coin & bullion is unique in many aspects and carries advanced anti-counterfeit features and tamper proof packaging. The Indian Gold coin & bullion is of 24 carat purity and all coins & bullion are hallmarked as per the BIS standards.
Amendments in Gold Deposit Scheme and India Gold Coin
Ministry of Finance has approved amendments toÂ Gold MonetisationÂ schemeÂ and amendments toÂ Indian Gold Coin SchemeÂ vide its Office Memorandum No. 1/21/2020-FT dated 9th February, 2021 which aim, to make the scheme simple, attractive and successful.
The benefits of gold monetisation scheme are:
- Mobilise idle gold:Â The scheme will help in mobilizing gold that has been lying idle in the confined spaces of households, trusts, and other institutions in India. The movement of gold in the national market will further benefit the Indian gems and jewellery sector which is a major contributor to Indiaâ€™s exports.
- Earn interest:Â Gold lying in your bank lockers or household does not earn you anything. In fact, when you store gold in a bank locker, it costs you bank locker charges to keep it safe. The gold monetisation scheme will help you earn interest on your gold deposits, which will add to your savings.
- Avail secured storage:Â Bank lockers are hard to get. Opening a gold deposit account with a bank will eliminate your tension regarding gold storage. Once you deposit your gold possessions, your bank will keep it secured and safe.
- Enjoy tax benefit:Â The earnings on the gold monetisation scheme are exempted from capital gains tax, wealth tax, and income tax. Even when the value of your gold deposit appreciates, capital gains tax will not be levied on it or on the interest you earn from it.
- Get flexibility on redemption:Â The gold depositor has the option to take either cash or gold on redemption. However, the redemption preference has to be mentioned at the time of deposit.
- Reduce the governmentâ€™s reliance on gold imports:Â The mobilised gold will also supplement the RBIâ€™s (Reserve Bank of India) gold reserves. It will also help the government in reducing the Governmentâ€™s cost of borrowing. In the long run, it is also expected to decreases Indiaâ€™s dependency on gold imports.