The Gold Monetization Scheme is a great opportunity for big Indian households to make profits from the old jewelry lying in bank lockers and at the bottom of safe deposit boxes. Companies, trusts, jewelry, and individuals who have a hoard of gold can also use this scheme to monetize their precious metal. But do not forget that your jewelry will not come back to you in the same form as you put them in – you get the returns in the form of money or gold coins and bars that you can later encash. In this article, I’ll explain to you How to Earn money from Idle Gold through the Gold Monetization Scheme without selling the Gold.
Furthermore, gold is treated as a commodity in the market and has an inverse relationship with a country’s local currency. Meaning, if a country is importing a large amount of gold, then the value of its currency must be going down.
But, owning gold is a hectic task because it requires a lot of security. This is the reason people who purchase gold are on the lookout for a place to store it. However, if you go to a bank for safekeeping your gold, they’ll charge amount for the security they provide, along with maintenance charges.
So, a matter pops-up in our mind- “Is there the simplest way to avoid these charges?” and “How to Earn money from Idle Gold?'” Well, it seems there’s. way It is referred to as a GMS or Gold Monetization Scheme.
- 1 What is Gold Monetization Scheme?
- 2 Benefits of Gold Monetization Scheme : Earn money from Idle Gold
- 3 How to apply for Gold Monetization Scheme?
- 4 How to Earn money from Idle Gold?
What is Gold Monetization Scheme?
Gold Monetization Scheme was introduced back in 2015 by the Government of India. Aimed at turning idle gold into a valuable asset, the scheme was initially introduced as a replacement for the former GDS (Gold Deposit Scheme) and GML (Gold Metal Loan) scheme. However, it was later clarified by RBI that Gold Monetization Scheme would be an improved version of both the Gold Deposit Scheme and Gold Metal Loan.
Gold Monetization Scheme is one of the ways to earn money from Idle Gold
The scheme is greatly helpful for reducing India’s dependability on gold imports, along with helping banks and NBFCs to monetize the idle gold of our country, which weighs over 20 thousand tonnes.
“But what’s in it for me?”- You may ask.
Well, with GMS, you can forget about the hustle you need to do to get bank lockers. You can easily deposit your gold under this scheme. Furthermore, you’ll be paid interest in depositing your gold. The interest amount will proportionally increase with the price of gold in the market.
Also, it should be noted that banks will not store your gold. They’ll convert them into gold coins and send it to Metals and Minerals Trading Corporation of India (MMTC), or sell it to other banks or jewelers.
Thus, you shouldn’t deposit the gold items that are valuable to you emotionally.
Benefits of Gold Monetization Scheme : Earn money from Idle Gold
- Attractive interest rates: For a product that usually remains idle in homes and lockers, the precious metal will earn you between 0.5% to 2.5% 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 Central Government. The interest rates currently being offered is as follows:
|3 year deposit||0.75% per annum|
|4 year deposit||1.00 % per annum|
|5 year deposit||1.00 % per annum|
- Variety in interest calculation: The short-term bank deposit under the Gold Monetization Scheme does not calculate interest in the form of money. It gives you interest in the form of gold in grams. So if the interest is 1% per annum, you get 1 gram on 100 grams. However, the medium and long-term government deposit schemes calculate the interest in the form of rupees with reference to the value of gold at the time of deposit. So if you deposited 50 grams at a value of Rs. 1,50,000 and the interest rate is 2.5%, you will get Rs. 3,750 as interest in a year.
- Withdrawal of the deposit: For short-term plans, you can specify at the time of deposit whether you want the returns to be made to you in the form of money or physical gold. If you choose to have your returns as physical gold, you get it as gold coins or bars in 995 fineness. You do not get your jewellery back in the same form as you put them in, because the banks are not storing your gold. Banks convert the gold you deposit into bullion or coins and either send it to Metals and Minerals Trading Corporation of India for minting India Gold Coins, or sell it to jewellers or other banks.
- Verification of purity: Over 330 Collection and Purity Testing Centres have been approved across the country to evaluate and verify the purity of the gold being deposited. Once you open a gold monetization scheme account in a bank, you will have to take your gold to the nearest government-approved collection centre, where the purity and quantity of your gold will be checked. The centre will take your gold and provide you a receipt for the gold quantity, which will be converted to a scheme certificate when deposited in the bank.
- Tax benefits: You do not have to pay capital gains tax on the profits made through the gold monetization scheme. The capital gains are also exempt from wealth tax and income tax.
How to apply for Gold Monetization Scheme?
How to Earn money from Idle Gold?
The procedure to apply Gold Monetization Scheme is very simple and can be broadly categorized in two parts,
1. Purity Verification and Deposit of Gold
Certificate of purity
A Collection and Purity Testing Center (CPTC) can assign you this certificate. They’ll perform some diffraction tests on your gold to check its purity, together with activity its weight. Once this can be done, they will give an officer receipt stating each amount and quality of the gold you own.
Your bank can give you with a final deposit certificate once you submit your CPTC receipt to them. the ultimate deposit certificate can contain all the data associated with your gold deposit. There area unit over 330 CPTCs approved across the country that you’ll be able to choose between.
2. Open a Gold Saving Bank Account
To Earn money from Idle Gold you need to apply for Gold Monetization Scheme, we can contact our bank. They’ll provide us with a gold savings account, which will be used for storing our physical gold like jewelry.
Following are some of the prerequisites that you require to have this account:
3. Know Your Customer (KYC)
You’ll be asked for your KYC details by the bank. For this, you’ll be able to give any proof of identification as recommended by your bank.
Pre-mature withdrawal is allowed, however, it’d lead to a penalty.
The capital gains underneath this theme are exempted from tax, wealth tax, and capital gains tax.
Pros & Cons
Pros of Gold Monetization Scheme
1. Income from Gold Certificate scheme is exempt from tax.
2. No wealth tax for the Gold deposited by you.
3. Income from Gold Deposit Scheme is exempt from Capital gain tax.
4. No need to fear of loss of theft.
5. Generate regular income from Gold, at the same time get the benefit of regular increase in the price of Gold.
Cons of Gold Monetization Scheme
1. Interest rate for Gold Deposit Scheme is too low.
2. You can’t get back the original model of Gold jewelery.
3. The money you invested in Gold jewelery, if it is kept in Fixed deposit, would have fetched you more returns
Gold Deposit Scheme (1999)
Gold Deposit Scheme (GDS) was introduced on September 14th, 1999. The scheme had similar motives as the GMS scheme, but the Gold Deposit Scheme suffered from some drawbacks. What were those, let’s find out.
- Gold Deposit Scheme was highly inconvenient to implement for several banks back in 1999. Hence only fewer banks were providing this scheme.
- Under the Gold Deposit Scheme, the minimum tenure limit was 3-7 years. This created problems for people who’d wanted to withdraw their gold earlier at their convenience.
- Gold Deposit Scheme of 1999, restricted mutual funds to invest.
Gold Deposit Scheme saw several modifications when it was relaunched in 2013, but the scheme still required some updates. Hence, the reason Gold Monetization Scheme was introduced in 2015.
Here is official documentation From RBI about Gold Monetization Scheme
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