What Is The Gold Monetisation Scheme And Why You Need To Know About It

In the ever evolving scenario following the 8^th November 2016 currency withdrawal, a lesser known term is now frequently being spoken about – it is the gold monetisation scheme. Let us look at what it is and the reasons behind the fact that we’re hearing about this gold monetisation scheme in the headlines recently.

Bank Bazaar defines it like this: a scheme designed to help you earn interest on your unused gold lying idle in bank lockers. The Gold Monetization Scheme is basically a new deposit tool to ensure mobilization of gold possessed by various families and institutions in India.

This scheme presents an alternative to physical gold as an investment. When you hold physical gold, it doesn’t earn any income and the price you get when you sell, will depend wholly on the current market price at the time. Under the gold monetisation scheme, you can deposit your gold with a bank (minimum of 30 grams for the duration of one, two or three years) whether in coins, jewelry or bullion and earn interest on that gold.

You can deposit your gold with any bank that offers the scheme and earn some attractive returns. This is meant to disincentivise hoarding and also lower reliance on gold imports.Around 5,73 tonnes have been invested in the scheme since it was launched November last year.

Since gold is a preferred method for storing undisclosed income there is now likely to be scrutiny of gold purchases made since the demonetisation of currency announced on 8^th November.

Apart from the benefits of getting interest on your gold ‘investment’, there could also be other reasons for investing: as a tax payer you may be able to escape certain penalties if you invest at least a portion of gold purchases in the scheme.

Customs officials are currently on the scent of about 500 jewelers in the country; checking to see which ones have made large deposits in the last few days. So if you’ve bought gold in the past two weeks, you're under potential scrutiny.