Gold scheme tweaked further to attract investors

NEW DELHI: The finance ministry on Friday modified the Gold Monetisation Scheme (GMS) to make it more attractive for the investors.

In a statement, the finance ministry noted that at the time of maturity, for the gold deposited under the scheme, the depositor will provided an option to redeem the principal either in Indian rupee equivalent or in gold.

“Where the redemption of the deposit is in gold, an administrative charge at a rate of 0.2% of the notional redemption amount in terms of Indian rupee shall be collected from the depositor,” the statement noted, adding that the interest accrued on Medium and Long Term Government Deposits (MLTGD) shall be calculated with reference to the value of gold in terms of Indian rupees at the time of deposit and will be paid only in cash.

The ministry said that the modification will make the scheme more attractive for potential depositors, which so far has received little interest and around 3 tonnes of gold has been deposited.

In the Budget 2016-17, the government had proposed to extend tax benefits to investors depositing their gold under the GMS, 2015 by exempting it from capital gains tax. Interest received from this scheme is also proposed to be exempted from tax.

In January, the government had tweaked the scheme and allowed medium term deposit to be withdrawn after three years and any long term deposit after five years, subject to a reduction in the interest payable.

The scheme was launched last year by prime minister Narendra Modi with an aim to curb gold imports, and bring down the country’s current account deficit. It is estimated that 22,000 tonnes of idle gold is lying with Indian households. India’s gold import were around $36 bn in 2015.