Skip to main content

Gold Deposit Scheme and Gold Metal Loan Scheme

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved on Wednesday proposals for new gold monetisation and gold bond schemes. The aim of the schemes, proposed in the 2015- 16 Budget speech, is to reduce India's gold demand and imports, putting into use the stocks with citizens.

The Gold Monetisation Scheme ( GMS) consists of a revamped Gold Deposit Scheme and Gold Metal Loan Scheme. The objective of introducing the modifications is to make the existing schemes more effective and to broaden the ambit from merely mobilising gold held by households and institutions to putting this into productive use.

Under GMS, the gold deposited by households to gold savings accounts will be put to use for auctioning, replenishment of the Reserve Bank's ( RBIs) gold reserves, coins and lending to jewellers.

The tenures of deposits can be for a short term of one to three years, amedium term of five to seven years or a longer term of 11- 15 years. For the short term, the interest rates will be decided by banks. For the other tenures, RBI, in consultation with the government, will decide. The interest income to depositors will be tax- free, as in the Gold Deposit Scheme. If the gold is loaned to jewellers, the rates will be decided by banks in consultation with RBI.

Speaking after the cabinet meeting, Finance Minister Arun Jaitley said around 1,000 tonnes of gold was imported annually and people hold much idle gold only for investment purposes. With GMS, people can deposit idle gold with authorised agencies, taking advantage of price escalation in gold and earn interest on the deposit, he said.

"The deposit tenure would be short, medium or long term and if the idle gold is deposited in the banking system, then at the time of redemption, people can get the actual value. Physical gold can be obtained if it is a short- term deposit. Besides, people will also get the interest," Jaitley said.

He and later economic affairs secretary Shaktikanta Das said the notification and date of implementation of the GMS would be announced very soon.

Pluses, issues

Das said depositors cannot benefit from appreciation in the value of gold in the existing schemes but will be doing so from any increase in the metal's value under GMS.

On the gold bond scheme, Jaitley said the interest on these would be decided keeping the market rate in view and redemptions could be done through banks, nonbank finance companies and post offices.

The scheme will have an annual cap of 500g per person and such bonds would be issued for a period of five to seven years. The bonds will be issued in two, five and 10 grammes or other denominations. The tenor could be for a minimum of five to seven years, so that it protects investors from medium- term volatility in gold prices, Jaitley said.

Issuance of Sovereign Gold Bonds will be within the governments market borrowing programme for 2015- 16 and onwards.

Issuance will be determined by RBI, in consultation with the ministry of finance. The government's borrowing programme will be adjusted accordingly, Das said.

"Since the bond will be a part of the sovereign borrowing, these would need to be within the fiscal deficit target for 2015- 16 and onwards," explained the official statement.

The gold bond scheme is estimated to help reduce the demand for physical gold by shifting part of the estimated 300 tonnes of physical bars and coins purchased every year for investment into bonds. " Since most of the demand for gold in India is met through imports, this scheme will ultimately help in maintaining the countrys current account deficit (CAD) within sustainable limits," the statement added.

The government plans to borrow ₹ 6 lakh crore in the current financial year, of which ₹ 3.6 lakh crore would be done in the first half. Rising gold imports had pushed up Indias CAD to a record high of 4.8 per cent of gross domestic product ( GDP) in 201213. In 2014- 15, it was brought down to 1.3 per cent of GDP.

Capital gains tax will be the same under the gold bond scheme as it is for physical gold for an individual investor. On the gold monetisation scheme, the official statement said the risk of gold price changes would be borne by the Gold Reserve Fund ( GRF), to be created by the government.

"Savings in the costs of borrowing, compared with the existing rate on government borrowings, will be deposited in the GRF, to take care of the risk of increase in gold price that will be borne by the government. Further, the Fund will be continuously monitored for sustainability," it said.

Other details

Das said the revenue department had agreed that amendments to the Income Tax Act for providing indexation benefits to long- term capital gains arising on transfer of bond and for exemption for capital gains arising on redemption of SGB will be considered in the next Budget ( for 2016- 17). " This will ensure that an investor is indifferent in terms of investing in these bonds and in physical gold as far as tax treatment is concerned," he said.

After announcement of the two gold schemes, share prices of jewellery entities rose. Gitanjali Gems was up 11.8 per cent, followed by Shree Ganesh Jewellery at 7.3 per cent.

This is only a green signal for the proposed schemes. There are operational challenges and detailing for most of the points touched upon, which I suppose will be addressed or discussed in the notifications that are planned to be released soon.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now