Should You Invest In Gold monetization scheme?

Should You Invest In Gold monetization scheme?

The new proposed Gold Monetization scheme offers tax exemption on interest accrued on gold deposits. It intends to mobilize gold held by institutions and households. The government drafted scheme under which an entity or a person can get interest by depositing yellow metal with banks. As per the proposed draft, minimum gold deposit will be 30 grams. Given the new features, will you invest in Gold Monetization scheme?


• The interest earned on god deposits would be exempt from capital gains tax as well as income tax making it an ideal investment.

• The pile of gold in India that is neither monetized nor traded is estimated to be more than 20,000 tonnes.

• The scheme will mobilize idle gold held by institutions and households, providing a fillip to the jewelry and gems sector and mitigate dependence on import of gold to meet the domestic demand.

• It is a good scheme for banks as they will be free to choose the interest rate. The flexibility in interest rate will also serve good to depositors and support competition.

• The tax exemptions hold significance importance fir taxpayers’ falling in the 30% income tax bracket. It would increase the post-tax return on their investments


• The scheme will hardly fetch attention of investors as it requires the gold deposits in prime gold form. It indicates that gold ornaments would have to be melted before depositing them with banks.

• The scheme will encourage people to buy more gold which again will lead to increased demand. It will lead to surge in imports.

• The move will only help upper class to earn the interest. It will demoralize families of lower class as they don’t have enough gold to keep as deposits with banks.

• Why would people take pain of finding a BIS-approved hallmark assaying center for evaluation purpose? There are many flaws in the process.

• The tax sleuths will come out asking the source of gold, which once again will be a big spoiler for the scheme.


India imports over 800 tonnes of the yellow metal each year. There is need of schemes that can help India to attract idle gold into the market. However, the latest Gold Monetization scheme comes with certain drawbacks. The major flaw is deposits in form of pure gold that will stop people from using the scheme. Government should work on this part so as to increase more and more gold deposits with banks.
Post your comment


  • RE: Should You Invest In Gold monetization scheme? -Deepa Kaushik (06/06/15)
  • Gold monetization is a good option for those who are financially well-off. Though his scheme is not viable for all, still we cannot condemn this scheme completely. The gold monetization scheme asks for the non-ornamental pure Gold. this requirement makes the scheme a bit messy to achieve the desired result of getting the consolidated gold to rotation.

    We should have thought of the Indian mentality and sentiments attached with the Gold before conceptualizing any such schemes. Indians have a huge amount of yellow metal consolidated which they preserve as asset, as ornamental and fashion value, and more importantly as sentimental and religious value. Unless the scheme covers the ideology of every segment of people, the scheme so designed becomes a failure.

    Gold molnetization scheme as of now covers the rich and modern society who prefer to invest and derive monetary gain from the available resources. On the vast majority, Indians have ornamental gold which have the sentimentalvalues attached with them. they prefer to disintegrate the jewellary as the last available option. we cannot expect people to melt andmould the jewels just to deposit at banks and get returns unless they are short of funds for their day-to-day needs.

    No doubt that the Goldmonetization scheme is by far the best option available, yet this is not feasible to get the expected outcome of Gold liquefication or getting the same to circulation in the market.