Gold Monetisation Scheme or GMS, a government scheme, offers the option of turning unused gold into a productive asset. Under this scheme, one can deposit their gold in any form to earn interest as the price of the gold metal goes up.
Here are key things to know about Gold Monetisation Scheme:
How it works?
Often people deposit their gold in storage lockers in banks and take it out when there is need. However, they are required to pay an annual fee to the bank for the storage locker. This means that they are actually spending money just to keep the gold safe.
According to Bankbazaar, GMS offers security to the gold by not only storing it but also returning it in the form of money or physical gold when the plan attains maturity.
Flexibility of deposit
The minimum deposit one can make in GMS is 30 grams of any purity. There is no maximum limit, according to Bankbazaar.
Tenure
There are 3 term deposit plans available under the GMS:
Short term: 1 to 3 years.
Medium term: 5 to 7 years.
Long term: 12 to 15 years.
Interest rates
For a product that usually remains idle in homes and lockers, the precious metal earns between 0.5 percent to 2.5 percent interest depending on the period of deposit. Short-term deposit rates are decided by the banks concerned, while the medium and long-term deposit interest rates are decided by the government.
Premature withdrawal
One can withdraw the deposit before the end of the tenure by paying a small penalty.
Taxation benefits
The earnings on the GMS are exempted from capital gains tax, wealth tax, and income tax. Even when the value of the gold deposit appreciates, capital gains tax will not be levied on it or on the interest one earns from it, as per Paisabazaar.
