Taxation on the Gold Monetization Scheme (GMS) in India is a key consideration for depositors seeking to monetize idle gold while ensuring compliance. Thus understanding GMS tax rules is essential. How are GMS earnings taxed, and what are the compliance requirements? Let’s break it down.
What is Gold Monetization Scheme:
The Gold Monetization Scheme, 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. The scheme, revamped from the Gold Deposit and Gold Metal Loan schemes, also accepts a minimum of 10 grams with no upper limit. Read more about Gold Monetization Scheme on Artho Shots!
Tax Rules and Benefits:
- Interest Income: Interest (0.50%-0.60% p.a. for STBD) is exempt from income tax, per Section 10(15), thus saving depositors ₹5,000 annually on average.
- Capital Gains:
- If redeemed in INR, gains are taxed as capital gains—short-term (held <36 months, slab rates) or long-term (≥36 months, 20% with indexation), per Section 45.
- If redeemed in gold, capital gains tax is deferred until the gold is sold, per CBDT.
- Wealth Tax: Deposited gold is exempt from wealth tax, per Section 2(ea).
In 2024, ₹1,500 crore in tax notices were issued for unreported gains, per Business Standard. The scheme also reduces import costs ($46 billion in 2024, per IBEF), boosting savings.
Compliance and Key Rules:
- Reporting: Declare capital gains in ITR-2/3 under “Capital Gains,” using Form 26AS/AIS to verify deposits, per Income Tax rules.
- Documentation: Obtain deposit certificates from banks (e.g., SBI) and purity certificates from BIS-accredited CPTCs, per RBI.
- Filing Deadline: File ITR by July 31 (FY 2024-25), per Section 139. Non-residents are ineligible.
- TDS: No TDS applies to interest, but ensure PAN is linked to avoid issues.
In 2024, 5,693 depositors participated, per Business Standard. Non-compliance risks penalties up to ₹10,000 under Section 234F.
Who Benefits?
Taxation on the Gold Monetization Scheme in India impacts individuals, HUFs, and trusts depositing gold, especially those with long-term holdings benefiting from indexation. In 2024, 20% of depositors were high-net-worth individuals, per IBEF. Monitor Form 26AS and also consult a tax advisor for accurate ITR filing.
Conclusion:
In conclusion, taxation on the Gold Monetization Scheme in India offers tax-efficient returns but requires careful compliance post-2025 STBD focus. By understanding the Rules and Compliance, you can also avoid the penalties and ensure correct filing. Ready to monetize your gold? Explore more tax insights now!
– Ketaki Dandekar (Team Arthology)
Read more about Taxation on Gold Monetization scheme here – https://www.bajajfinserv.in/gold-monetization