Investments, marriage or festive season, gold hasbecome the dearest asset to most Indian families. Prime Minister Narendra Modi launched four new gold schemes — gold monetisation scheme (GMS), goldsovereign bond scheme, gold coin scheme and the gold bullion scheme on 5 November, 2015.
Is it safe to invest in these schemes or can you easily turna blind eye to it? Know the purpose behind these gold schemes, before takingthe final decision.
Gold MonetisationScheme (GMS):
The Gold Monetisation Scheme will basically replace theexisting Gold Deposit Scheme, 1999. It consists of a revamped Gold DepositScheme and Gold Metal Loan Scheme. Investing in gold monetisation scheme canhelp you earn up to 2.50% interest rate on idle gold. Interest rate on mediumand long term government deposit (MLTGD) is 2.25% and 2.20%, respectively,according RBI’s notification. The deposit tenures are of three types- shortterm of one to three years, a medium term of five to seven years or a longerterm of 11 to 15 years.
India Gold Coin Scheme:
Under the India Gold Coin scheme, coins will be available indenominations of five and 10 grams. Around 15,000 coins of five grams, 20,000 coinsof 10 grams and 3,750 gold bullions can easily be available through MMTCoutlets. The Indian gold coin will carry tamper-proof packaging that will aid easy recycling, according media reports.
Sovereign Gold Bond Scheme:
You need to remember that applications for these bonds willbe accepted from 5 November to 20 November, 2015. The Reserve Bank of Indiawill also ensure that the bonds will be issued on November 26, 2015. The saleof sovereign gold bonds is for a limited period and will be done via banks andpost offices. This is the first tranche of the gold bond scheme and subsequenttranches would be notified later.
Eligibility criteria: Only Indian residents are allowed toinvest in Sovereign Gold Bond Schemes. The investment can either be doneindividually or jointly or in the name of minor as well. This investment can beheld in paper, certificate or in a demat form.
Annual interest rates: RBI has fixed the interest rate of2.75 per cent per annum on your initial value of investment. The issue pricefor the sovereign gold bond has been fixed at been fixed at Rs 2,684. There isno compounding of interest involved in this. Interest can be paid onhalf-yearly basis. You need to know that the last interest can conveniently bepaid during the maturity period.
Tax rates: The interest earned on gold bonds is taxable. Thecapital gains tax will also be levied incase of physical gold. If you fall inthe category of 10% tax rate, you will benefit by a post-tax return of 2.47%.But if you are an investor with 30 per cent tax rate, expect 1.9 % post-taxreturn. If you transfer gold after holding it for 36 months or more, around 10-20% tax will be applicable after indexation. For short-term gains below 36 months,gains are added to income.
Liquidity and redemption: You need to remember that goldbonds have tenure of eight years. However, you can withdraw prematurely fromfifth year itself. Holdings can be redeemed in multiples of one gram. But, theredemption price will be based on prevailing gold prices. You, as an investor,will be allowed to transfer gold bonds as well. This highlights the provingliquidity factor of gold bonds. Trading may also be allowed in such bonds infuture.
Issue Price: Price ofthe bonds is fixed in rupee terms on the basis of the previous week’s simpleaverage closing price for gold of 999 purity, according to the India Bullionand Jewellers Association Ltd. (IBJA).
Loan against gold bonds: A gold bond is similar to the National saving certificate of the postoffice.The gold bond paper can beconsidered as the collateral for the loan. The loan to value ratio would be thesame as set for gold loan by the RBI.
Secondary bond market: There is a high possibility that youmay need money before the maturity period of the gold bond. What should you doin such situations? You can still be at relief. One can easily sell the bond anytime to another person through thesecondary bond market.You can also sell your demat gold bond through the NSEregistered brokers as well. The bondprices are then determined by the market.
No comments:
Post a Comment