What is Gold Monetisation Scheme?
Gold is the staple status commodity of India. The demand for gold has risen over the past few decades but the value have seen unanticipated fluctuations resulting in a deficit in the country’s current account.
In order to encourage the citizens to be more invested in gold the Government have introduced the Gold Monetisation Scheme to store gold in any form (bullion or jewellery). The gold will earn an interest on the gold weight as it is lent to banks for a higher rate of interest.
- Risk: Risk is linked to the value of gold in the market
- Returns: Not fixed, pain in gold terms
- Taxation: Fully exempted
- Lock-in Limitations: Minimum one year. Varies for short, medium and long term.
- Withdrawals: The bonds can be redeemed or transferred after the lock-in period
- Capital Protection: There is no protection for the capital as it is linked to the gold prices in the market
- Inflation Protection: There is no cover for inflation
The aim of this scheme is to encourage investors to invest their gold in storage and earn interest over a period of time.
|Entry Age||No age limit prescribed
|Interest||Paid in terms of gold|
|Exit Option||Premature closure is not permitted|
Capital & Inflation Protection
There is no capital protection as the bonds are linked to the price of gold in the market.
If gold prices along with the interest beat the inflation there will be positive returns, else there is no inflation protection for these bonds.
The gold for which the investor buys the bonds is secured. The amount of interest that is paid in terms of gold and is fully exempted from tax with no capital gains.
It can be redeemed in preference of either in gold or rupee value which has to be decided at the time of deposit.
The capital gains that an investor earns from the bonds are exempted from capital-gain tax, wealth tax and income tax on its redemption.
Account Setup Information
How to invest?
The gold purity must be ascertained at a testing centre. If the test passes the criterion set a certificate is issued which can be used to make the deposit in the bank.
- The gold deposited will be melted down and the form will be different at time of redemption
- This scheme offers interest payable on gold and the interest of your deposit
- This scheme also includes the initiative by Prime Minister Narendra Modi, Indian Gold Coin, which aims to monitise the idle gold lying with citizens. The 24 karat gold is made as per BIS Standards by Metals and Minerals Trading Corporation of India (MMTC) that has high liquidity and cannot be duplicated as it comes with Tamper-proof packaging.