Prime Minister Narendra Modi on Thursday launched three gold related schemes- Gold Monetisation Scheme (GMS), Gold Sovereign Bond Scheme and the Gold Coin and Bullion Scheme.
Speaking on the occasion, Modi said India has surpassed China as the world's largest gold consumer, buying 562 tonnes of yellow metal so far this year, against China's 548 tonnes.
"People should take advantage of the golden opportunity to help India march to a golden period," he said.
Terming the three schemes as "sone pe suhaga," the PM also launched the national gold coin ahead of the festive season, namely Dhanteras. Indians consider buying gold, albeit in small quantities, auspicious on the day of Dhanteras. The government's move comes on the hope that Indians, with their obsession for the yellow metal, will prefer the national coin over imported ones.
The coin is the first ever national gold coin minted in India with the national emblem of Ashok Chakra engraved to be released among others on the occasion.
PM Modi further said the question of physical gold's security will now be ruled out and women will benefit the most from these schemes.
Scheme highlights:
Gold Monetisation Scheme (GMS), 2015
The GMS will replace the existing Gold Deposit Scheme, 1999. However, the deposits outstanding under the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely withdraw them.
Sovereign Gold Bond Scheme
The sovereign gold bonds will be issued in multiple tranches subject to the overall borrowing limits of Government of India (GoI). Applications for the bond under the first tranche will be accepted from November 05, 2015 to November 20, 2015. The Bonds will be issued on November 26, 2015. The Bonds will be sold through banks and designated post offices as notified.
Gold Coin/Bullion Scheme
The coin will be the first ever national gold coin minted in India and will have the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other side . Initially, the coins will be available in denominations of 5 and 10 grams.
A 20 gram bullion will also be available. Initially, 15,000 coins of 5gm, 20,000 coins of 10 gm and 3,750 of bullions of 20 gm will be made available through MMTC outlets.
The Indian Gold coin & bullion is unique in many aspects and will carry advanced anti-counterfeit features and tamper proof packaging.
_PAGEBREAK_
Below is the verbatim transcript of RK Sharama’s interview with CNBC-TV18's Reema Tendulkar and Nigel D’Souza.
Nigel: What is your initial take on the issuance of these gold bonds? A fixed yield coming in? What do you believe? Do you believe that demands are going to be strong on this front?
A: All of these schemes launched today gold monetisation and sovereign gold bond scheme and Indian gold coins. This is a welcome move from the government and this is a start basically aiming at reducing the overall gold imports. As far as gold monetization is concerned, the short term is very good, very interesting it is also 2.25-2.50 percent and banks are also permitted to offer higher rates if they can. So I think there will be response in the gold monetization scheme, but as far as sovereign gold bond are concerned, the tax liability will also be there and secondly Indian population sentiments are attached to the physical gold, so there may be some limitation in this gold bond’s success.
Reema: Mr. Sharma just explain it to us simply, on the gold coin, what will be the interest someone can earn as well as on the taxation bit? On the gold monetization scheme we understand the interest will be 2.25-2.5 percent and what will be the tax on that and finally even on the gold bond scheme where you said the interest rate could be 2.75 percent, so just explain for all these three schemes what the interest payable will be or the interest yield and the taxes.
A: What sense I get is, as regards gold monetization, all tax exemptions will be available on this scheme. So there will not be any tax liability but there will be only one effect that source may be asked from the depositor, where from and when you purchased the gold and all that but I think the Income Tax Act will be amended to take care of this otherwise, when I purchased gold, what is the tax indexation that will be difficult task for deciding this. Secondly government wants to make it very effective, so I do not think there will be much difficulty in implementation of this scheme. Success rate may be slower at initial stage but ultimately we are hopeful that it is a good scheme and somehow imports will be curtailed.
Reema: And for the gold bond scheme, you said they will be taxed.
A: Yeah, basically that is taxable and these tax benefits are not available there and secondly people’s sentiments are attached to it. If I purchase gold for my home, for five-ten year, both go both sides, one side it is good because there is no hassle of physically keeping the gold and investing only in infrastructure and everything, that is the plus point. Second, somehow people want to keep it with them. Otherwise you can see that there are so many instruments already, mutual funds and all that but success rate is very limited.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
