Gold Monetisation Scheme: Know Its Features, Investment Process And Tax Benefits

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Curated By: Business Desk

Last Updated: December 09, 2023, 16:39 IST

The Gold Monetisation Scheme was launched in 2015.

Under the Gold Monetisation Scheme, you aren’t required to pay capital gains tax on your investment or the interest earned.

Most people prefer liquidating gold assets by selling them for cash or by obtaining a gold loan against it. Investing these assets in a government scheme could work like wonders. If you subscribe to the Gold Monetisation Scheme (GMS) and deposit your gold with the concerned government authorities, it will earn you a monthly income, while keeping your jewellery safe. This scheme was launched in 2015 to reduce the country’s dependence on gold imports and can be a worthy investment option for those with a low risk tolerance.

Key Features of Gold Monetisation Scheme:

Individuals deposit their gold jewellery, gold bars, or gold coins in banks under the Gold Monetisation Scheme.

The government guarantees interest on the deposited gold. The interest is paid annually, and the value of gold increases based on market rates.

The scheme has three parts: Short Term Bank Deposit (1-3 years), Medium Term (5-7 years), and Long Term (12-15 years).

The interest rates vary with each part, ranging from 2.25% to 2.5% annually.

How to invest in the Gold Monetisation Scheme?

To invest in the Gold Monetisation Scheme, follow the below-mentioned steps:

Open a gold deposit account at a bank and complete the Know Your Customer (KYC) process.

The bank will verify the purity of the gold and issue a 995 gold fitness certificate.

Within the same day or 30 days, the bank will issue a certificate for the Short Term or Medium Term deposit scheme.

Interest payment begins 30 days after depositing the gold.

The scheme starts with a minimum deposit of 10 grams, and there is no maximum limit.

Interest Withdrawal Options For GMS

GMS subscribers can choose to withdraw the interest annually at a fixed rate. Alternatively, they can opt for compounding interest, resulting in higher returns over the scheme’s duration.

Gold Monetisation Scheme Tax Benefits

Generally, investments attract capital gains tax depending on the tenure of the investment. Capital gains tax is not applicable on the gold deposited via the Gold Monetisation Scheme, meaning the profits from both interest and increased gold value remain tax-free.

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