Gold deposit scheme opens

Source:Hindustan Times, September 15

The much publicised Gold Deposit scheme announced by Finance Minister Yashwant Sinha in the current year’s budget has been made operational by the Vajpayee Government in the midst of Lok Sabha elections. According to a Finance Ministry notification issued on Wednesday, the scheduled banks would accept gold deposits from individuals, companies, charitable and religious institutions in the form of bars, coins and gold jewellery.

Those intending to deposit gold will have to apply in prescribed forms provided by designated banks. Against the deposited gold, the banks will provide a gold certificate or statement of account or a passbook to subscribers of the scheme.

It was stated that the gold deposit scheme will come into effect immediately. It is likely to be an on-going scheme as the Finance Ministry has not announced the closure date. Subscribers of gold deposits scheme would be entitled to interest payments as rates announced by the Reserve Bank of India (RBI). The interest rates are expected to be on the lines of rupee deposits made by individuals in banks. There will not be any bar on the amount of gold to be deposited in the bank. But,no one would be entitled for claiming amnesty on unaccounted gold deposited in the banks under this scheme.

An individual depositing gold in an RBI designated bank can avail the nomination facility on the lines of usual rupee deposits. The gold certificates are transferable by endorsement and delivery.

According to North Block officials, the scheme prescribes a mandatory lock-in period for gold deposits made with banks. The lock-in period or mandatory storage time will have to be adhered to by subscribers before the deposits are withdrawn.However, the banks would be able to release gold prematurely either in the form of gold or in cash equivalent to the price of gold on the date of encashing the gold certificate. But, premature release would be done after expiry of the prescribed lock-in period.

The Finance Minister, through his budget proposals, had announced exemption of interest accruals on gold deposits from income tax. The value of gold assets deposited with the banks under the scheme have also been exempted from wealth tax.

Since these gold deposit bonds and certificates are tradable instruments, any profit made on trading or redemption of gold has been exempted from capital gains tax as well.

The states have also been asked by the Finance Minister to exempt the movement of gold covered under the scheme from octroi, sales tax, stamp duty and similar levies. The foreign exchange savings due to reduced gold import is expected to be substantial. India is regarded as the largest gold importer after US.