A- GOLD MONITISATION SCHEME
About- Banks will collect gold for up to 15 years to
auction them off or lend to jewellers from time to time. They will pay
2.25-2.50 per cent interest a year, higher than previous rates of around 1 per
cent.
Period Involved- The
designated banks will accept gold deposits under the Short Term (1-3 years)
Bank Deposit as well as Medium (5-7 years) and Long (12-15 years) Term
Government Deposit Schemes.
Procedure-
1.
It is important to check your
gold's purity and thankfully that can now be done through Collection and Purity
Testing Centres. You can take your gold in any form to these centres and they
will assess the gold in front of you and provide you with a certificate on
purity and gold content, once you decide to deposit the gold in one of the
deposit schemes.
2.
The designated banks may sell
or lend the gold accepted under the short-term bank deposit to MMTC for minting
India Gold Coins and to jewellers, or sell it to other designated banks
participating in the scheme.
3.
Investors will
have to disclose their PAN, registered with the income tax department, if the
value of gold is worth more than Rs. 50,000. Some
people fear it is a way for the government to keep a tab on the source.
4.
People can
deposit a minimum 30 grams of raw gold - bars, coins, jewellery excluding
stones and other metals. There is no maximum limit for deposits under the
scheme.
Benefits
1.
The gold monetisation scheme
earns interest for your gold jewellery lying in your locker. Broken jewellery
or jewellery that you don't want to wear can earn interest for you in gold.
2.
Your gold will be securely
maintained by the bank.
3.
Redemption is possible in
physical gold or rupees hence giving your gold purchase further earning
opportunity.
4.
Earnings are exempt from
capital gains tax, wealth tax and income tax. There will be no capital gains
tax on the appreciation in the value of gold deposited, or on the interest you
make from it.
Doubts on
success
1. Industry experts and bankers say many
prospective depositors may not take up the monetization scheme due to concerns
that the tax department could question the source of gold.
2. Another concern is the likely loss of
20-30 per cent of the weight of jewellery as it is melted at certified centres
at the cost of the depositor. Also, say experts, some people may find
conventional bank deposit rates of 8 per cent more attractive.
3. Most Indians
look at gold linked to tradition and customs, rather than as a mere investment
asset. Parting with their gold ornaments, even the idle ones, is a last resort
for her. It would be unwise to expect households to actively participate in any
schemes that involve ‘melting’ the long-preserved jewellery. The past record of
the gold deposit schemes that have so far received lukewarm response is a proof
for this. For instance, SBI’s gold scheme, though in existence for several
years, hasn’t taken off well as the bank has managed to mobilise only about 8
tonnes so far.
B- GOLD SOVEREIGN BOND SCHEME
About- The Government of India has
launched the Sovereign Gold Bonds Scheme. As investors will get returns that
are linked to gold price, the scheme is expected to offer the same benefits as
physical gold. They can be used as collateral for loans and can be sold or
traded on stock exchanges. Additionally it offers
2.75 per cent interest to domestic investors to cut physical buying. Interest
on gold bonds will be payable every six months.
Sovereign Gold Bonds will be issued on payment of rupees and denominated in
grams of gold. Minimum investment in the bond shall be 2 grams. The
bonds can be bought by Indian residents or entities and is capped at 500
grams.
Investors can apply for the bonds through scheduled commercial banks and
designated post offices. NBFCs, National Saving Certificate (NSC) agents and
others, can act as agents. They would be authorised to collect the application
form and submit in banks and post offices.
On maturity,
the redemption proceeds will be equivalent to the prevailing market value of
grams of gold originally invested in Indian Rupees . The redemption price will
be based on simple average of previous week’s (Monday-Friday) price of closing
gold price for 999 purity published by the IBJA. Both interest and redemption proceeds
will be credited to the bank account furnished by the customer at the time of
buying the bond.
Benefits:
1.
The Sovereign Gold Bonds will
be available both in demat and paper form.
2.
The tenor of the bond is for a
minimum of 8 years with option to exit in 5th, 6th and 7th years.
3.
They will carry sovereign
guarantee both on the capital invested and the interest.
4.
Bonds can be used as
collateral for loans.
5.
Bonds would be allowed to be
traded on exchanges to allow early exits for investors who may so desire.
6.
The
risks and costs of storage are eliminated.
7.
In Sovereign Gold Bonds,
capital gains tax treatment will be the same as for physical gold for an
'individual' investor. The department of revenue has said that they will
consider indexation benefit if bond is transferred before maturity and complete
capital gains tax exemption at the time of redemption.
8.
Investors
are assured of the market value of gold at the time of maturity and periodical
interest.
9.
SGB
is free from issues like making charges and purity in the case of gold in
jewellery form.
10.
The
bonds are held in the books of the RBI or in demat form eliminating risk of
loss of scrip etc.
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