India Not to Tax Gold Monetization Deposits

Arun Jaitley
Arun Jaitley

New Delhi: Seeking to mobilize idle gold worth up to Rs 60 lakh crore held by households and institutions, government on Tuesday proposed a new scheme offering tax-free interest on depositing the yellow metal with banks.

The draft gold monetization scheme also provides for incentives to the banks, while individuals and institutions can deposit as low as 30 grams of gold, while the interest earned on it would be exempt from income tax as well as capital gains tax.

The stock of gold in India that is held by people of the country that is ‘neither traded nor monetized’ is estimated to be over 20,000 tonnes, which would be worth about Rs 60 lakh crore at the current market price. A large amount of gold is also held by temples and other religious institutions. However, the draft scheme does not specifically mention the kind of institutions that would be covered under it.

India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of the metal each year. As per the draft guidelines, a person or institution holding surplus gold can get it valued from BIS-approved hallmarking centres, open a Gold Savings Account in banks for a minimum period of one year and earn interest in either cash or gold units.

The finance ministry has sought comments from stakeholders on the draft gold monetization scheme by June 2.

The scheme, which is proposed to be initially introduced only in select cities, was announced in the budget this year by finance minister Arun Jaitley.

“The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold,” Jaitley had said.