The country’s central bank has tweaked changes with the Gold Monetisation Scheme (GMS). The modifications now allow charitable institutions, central government and other entities to deposit under GMS. “Persons eligible to make a deposit – Resident Indians [Individuals, HUFs, Proprietorship & Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual Fund) Regulations, Companies, charitable institutions, Central Government, State Government or any other entity owned by Central Government or State Government] can make deposits under the scheme,” read the Reserve Bank’s notification.
Gold has always been a medium of investment and savings in our country. But gold was part of personal savings and did not play role in the development process of the country. Gold imports come at the second number after crude oil in balance sheets of India, so it is one of the major causes for large Current Account Deficit (CAD) in our country. In the last financial year, India spent almost 1.7% of its GDP on gold imports of approximately 1000 tonnes. Getting out 20000 tonnes stock of gold from within four walls of households and from several walls of temples is the need of the hour to reduce dependence on imports and saving foreign exchange.
Hence government has launched Gold Monetization Scheme to make gold not only part of household savings and security but give earnings to individual and become a part of nation-building.
Gold Monetization Scheme (GMS) will replace the Gold Deposit Scheme, 1999 but deposit outstanding under gold deposit scheme will be allowed to run till the maturity.
Major Features of GMS
The minimum limit to deposit gold in the bank is set at 30 grams to attract gold deposit even from households which were 500 grams in the previous scheme.
To avail benefits first, a person has to verify gold purity at Collection & Purity Testing Centers (CPTC) certified by Bureau of Indian Standards (BIS) which will determine the value of gold and interest to be gained in a particular time period.
The individuals or trust or companies have to open a gold deposit account with banks to deposit the gold and earn interest on them. The Interest shall be payable in form of gold or money as opted by the depositor at time of opening the account.
The interest earnings are exempted from capital gains tax, wealth tax, and income tax to attract the depositors.
The minimum tenure is one year to get benefits of the scheme and bank will design short term (1-3 years), Medium (5-7 years) and long term (12-15 years) gold deposit schemes.
The banks may sell or lend gold accepted under GMS to Metals and Minerals Trading Corporation of India (MMTC) to issue gold coins and to jewelers or further sell it to other banks that are engaged in GMS.