The Gold Monetization Scheme (GMS) in India, launched in November 2015, encourages households and institutions to deposit idle gold with banks to earn interest, thus reducing reliance on gold imports. With India’s gold demand at 857 tonnes in 2024, GMS is a strategic tool for financial growth. What is it, and how can it benefit you? Let’s break it down.
What Is the Gold Monetization Scheme?
The Gold Monetization Scheme, under the Income Tax Act, 1961, allows resident individuals, HUFs, trusts, and SEBI-registered mutual funds to deposit gold (jewellery, coins, bars) with banks, earning interest on Short-Term Bank Deposits (STBD, 1-3 years). The scheme, revamped from the Gold Deposit and Gold Metal Loan schemes, also accepts a minimum of 10 grams with no upper limit.
For example, depositing 100 grams at 0.60% p.a. for 3 years yields interest in INR. In 2024, 31,164 kg of gold was mobilized, per Business Standard, but medium- and long-term deposits were discontinued in March 2025, per the Ministry of Finance.
Benefits: Financial Returns and Safety
The GMS transforms idle gold into an earning asset, thus saving locker fees—90% of depositors avoided ₹5,000 annual storage costs, per Economic Times. Interest (0.50%-0.60% p.a. for STBD) is tax-exempt, per Moneycontrol, and principal redemption also offers gold or INR options. The scheme also supports India’s economy by reducing gold imports, which hit $46 billion in 2024, per IBEF. In addition, it ensures gold safety via BIS-certified Collection and Purity Testing Centres (CPTCs), per CBDT.
Eligibility and Key Rules:
- Eligibility: Resident individuals, HUFs, trusts, and SEBI-registered funds; NRIs are ineligible, per RBI. Joint deposits are allowed.
- Process: Deposit gold at designated banks (e.g., SBI, ICICI) or CPTCs. Purity is tested, and a certificate is issued for 995 fineness gold, per BIS standards.
- Tenure and Interest: STBD (1-3 years) offers 0.50% (1 year), 0.55% (1-2 years), or 0.60% (2-3 years) p.a., paid in INR, per RBI. Premature withdrawal incurs penalties.
- Redemption: Choose gold or INR at maturity; premature STBD redemption may allow gold at bank discretion, per CBDT.
Who Benefits:
The Gold Monetization Scheme in India benefits individuals, HUFs, and trusts with idle gold, especially those seeking safe, low-risk investments. In 2024, 5,693 depositors participated, per Business Standard. With medium- and long-term deposits discontinued, focus on STBD for flexibility. Consult a financial advisor and check purity certificates before depositing.
Conclusion:
In conclusion, the Gold Monetization Scheme in India offers a secure way to monetize gold, but requires careful adherence to rules post-2025 changes. The scheme supports India’s economy by reducing gold import. Ready to unlock your gold’s value? Explore more financial insights now!
– Ketaki Dandekar (Team Arthology)
Read more about Gold Monetization Scheme here – https://cleartax.in/gms