NEW DELHI, NOV 19: For all those with pots of gold and no clue about what to do with it, there is finally a scheme that could earn them interest on gold. Union Finance Minister Yashwant Sinha had announced the Gold Deposit Scheme in this year's Budget, the State Bank of India has today put it to practice.And from the Delhi circles alone, it has been offered 100 kg of gold already. SBI's target for the first year is to mobilise deposits of 100 tonnes, which could save the country around Rs 5,000 crore of precious foreign exchange by way of lessening the need for gold imports.This is how the scheme works. You go to an SBI branch with gold in jewellery, coin or bar form which is at least 200 grams or 20 tolas in volume. Depositors can be individuals, Hindu undivided families, trusts as well as companies. The gold gets locked-in for a year. The jewellery, of course, mustn't contain any gems or jewels. The bank will assay this gold and tell you its exact value. You will start earning interest on this goldfrom day one, though the Gold Deposit Certificate will reach you in about two months' time. This certificate can be transferred by endorsement and delivery and SBI hopes to develop a secondary market for these certificates too. No transfer fee will be levied.Gold can be deposited for a tenure of three to seven years. Interest earned on gold varies between 3 to 4 per cent, depending on the tenure. Suppose you deposit gold for three years, you earn a 3 per cent interest on it, which is payable annually or compounded. And after three years, you get an interest income on the gold which is exempt from Income Tax. You can also take the interest in the form of gold. No wealth tax is levied on the deposited gold and no capital gains tax is levied on maturity of the scheme or on the transfer of the certificate. What you also get is the equivalent value of gold that you had initially deposited in 24 carat. Moreover, loans can be taken against the gold deposited at the prevailing rates.Even though G G Vaidya,Chairman, SBI, assured the depositors that individual data about their gold stocks with the bank would not be passed on to the government or the Income-Tax authority, this must not be mistaken with the Voluntary Disclosure of Income Scheme (VDIS). ``There is no provision in the Income-Tax Act for sharing customer-specific information with the officers of the Income-Tax Department, exceptions apart,'' Vaidya said at a press conference organised to announce the scheme. So if an I-T officer has reasonable apprehensions about a depositor, then the SBI will have to let out the details.Following SBI, other banks are also likely to bring out their gold deposit products soon.With this scheme, Vaidya feels that the country has entered a new era of gold banking. India, apparently, is the largest consumer of gold and consumes almost a fourth of the global gold production every year. The gold stocks in the country are estimated at around 13,000 tonnes, worth an astounding Rs 6,00,000 crore. What is of interest tothe government in particular is that the 80 per cent gold that Indians import for consumption may now come down substantially, saving precious foreign exchange. Last year, for example, 815 tonnes of gold was imported. And gold invariably lands up in bank lockers, in the form of dead investment. This way, some part of privately held gold will get into circulation, reducing the need to import more gold.Initially, the scheme is being offered in 13 cities of Ahmedabad, Bbangalore, Bhopal, Bhubaneswar, Calcutta, Chandigarh, Chennai, Guwahati, Hyderabad, Lucknow, Mumbai, New Delhi and Patna. But at a later stage, SBI plans to extend it to other cities as well.
