With Dhanteras and Diwali round the corner, are you thinking of investing in gold? Well, think twice before buying physical gold as the Government has recently launched schemes such as Gold Monetisation Scheme (GMS), 2015 and Sovereign Gold Bond Scheme (SGBS).
The GMS consists of the revamped Gold Deposit Scheme (GDS), 1999 and the revamped Gold Metal Loan Scheme. The objective of introducing this scheme is to mobilize gold held by households and institutions in the country and facilitate its use for productive purposes, and in the long run, to reduce the country's reliance on import of gold. The mobilized gold will also supplement the Reserve Bank of India's (RBI) gold reserves and will help in reducing the government's borrowing cos
GMS allows Resident Indians to deposit their gold with Banks and generate revenue in the form of interest, thereby transforming their nature from Non-Performing Asset to a Performing Asset. However, the tax benefits (if any) on the income arising on the GMS, have currently not been notified.
The GMS consists of the revamped Gold Deposit Scheme (GDS), 1999 and the revamped Gold Metal Loan Scheme. The objective of introducing this scheme is to mobilize gold held by households and institutions in the country and facilitate its use for productive purposes, and in the long run, to reduce the country's reliance on import of gold. The mobilized gold will also supplement the Reserve Bank of India's (RBI) gold reserves and will help in reducing the government's borrowing cos
GMS allows Resident Indians to deposit their gold with Banks and generate revenue in the form of interest, thereby transforming their nature from Non-Performing Asset to a Performing Asset. However, the tax benefits (if any) on the income arising on the GMS, have currently not been notified.
The features of SGBS are attention seekers for Indians who tend to buy gold frequently. Purchase of physical gold and holding it physically has added disadvantages such as ensuring the purity of gold purchased, bank locker charges and the risk of being stolen (if kept at home). Moreover, the physical gold does not produce any regular periodic income for the investor.
As an alternative to purchasing physical gold and to overcome the said disadvantages, investors could purchase gold in the paper format under this scheme. However, an important point to note is that there would be no tax benefits of investing in such bonds. The interest shall be taxable as per the provisions of the Income-tax Act, 1961 (Act) and the capital gains tax under the Act, shall also remain the same as in case of physical gold. However, such investments would yield reasonable interest on a semi-annual basis.
The bonds under SGBS would be issued on 26 November 2015 and will be sold through banks and designated post offices as notified.
As an alternative to purchasing physical gold and to overcome the said disadvantages, investors could purchase gold in the paper format under this scheme. However, an important point to note is that there would be no tax benefits of investing in such bonds. The interest shall be taxable as per the provisions of the Income-tax Act, 1961 (Act) and the capital gains tax under the Act, shall also remain the same as in case of physical gold. However, such investments would yield reasonable interest on a semi-annual basis.
The bonds under SGBS would be issued on 26 November 2015 and will be sold through banks and designated post offices as notified.
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