New Delhi: Holding out a promise of tax exemption, government on Wednesday cleared a scheme aimed at tapping a part of an estimated 20,000 tonnes of idle gold into the banking system and issuing sovereign bonds as an alternative to the precious metal.
Through the Gold Monetisation Scheme, approved by the Union Cabinet, gold in any form can be deposited with banks for a period of one to 15 years that will earn interest while redemption will be at the prevailing value at the end of the tenure.
Sovereign gold bonds, on the other hand, are aimed at people buying the precious metal as an investment. Such bonds will be issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of five years to seven years with a rate of interest to be calculated on the value of the metal at the time of investment.
However, there will be a cap of 500 grams that a person can purchase in a year. Such bonds will be offered to only Indian citizens and institutions while the securities will be traded on exchanges to allow early exit for investors. ‘‘It is safer and economically more stable to go under both these schemes,’’ Finance Minister Arun Jaitley said while briefing reporters about that decision of the cabinet, which is a follow-up of an announcement made by him in the Budget for 2015-16.
Economic Affairs Secretary Shaktikanta Das later said that under the Gold Bond Scheme, the government plans to exempt capital gains that will be made at the time of redemption. ‘‘These schemes will be launched very soon,’’ he said, adding that they were different from earlier schemes in the sense that deposits will be denominated in gold instead of money.
As regards monetisation scheme, banks will be allowed to sell the gold, deposited with them, to jewellers to boost domestic supply and cut reliance on imports.
But there will be no dilution in Know-Your-Customer (KYC) norms and gold depositors will have to make full disclosures on the source of the precious metal, he said. “We do not want to allow Gold Monetisation Scheme to become a vehicle for converting black money into white.” The gold monetisation scheme provides for incentives to the banks, while individuals and institutions can deposit as low as 30 gm of gold, while enjoy the same tax treatment as was accorded to Gold Deposit Scheme of 1999. (PTI)
