SBI Gold Deposit Scheme

SBI Gold Deposit Scheme

SBI Gold Deposit Scheme (GDS) is in the nature of a fixed deposit in gold. The customers can deposit their idle gold under GDS which will provide them safety, interest earnings, tax benefits and a lot more. Under this scheme, you can deposit minimum 500 gram of gold with SBI and maximum as much as you want. Many Temples and trusts in India deposit literally hundreds of KGs of gold every year with SBI. Once you deposit your gold with SBI, The gold deposited is melted, assayed (tested) and minted (coined) at the India Government Mint (IGM) before the Gold Deposit Certificate is sent to the depositor within 90 days from the day the gold is deposited (The expenses incurred in this connection will be borne by the bank). It will indicate the weight of pure gold in the gold deposited, in 999 fineness. However, a provisional receipt is issued by the bank immediately upon receiving the deposit. With the help of the certificate, the depositor can claim the gold upon maturity of the deposit (alternatively, the depositor can claim back the INR equivalent of gold deposited at prices ruling on the day

You will not get your jewellery back in the same form what you deposited. SBI melts the deposited gold and check the purity and then converts it into gold bars. Depending on the purity of the gold you deposited SBI send you a gold deposit certificate within 90 days. The Bank bears all expenses associated with this process. The gold is returned in bar/bullion or equivalent cash. If you deposit in bar or bullion, the Scheme is more beneficial.

However, unlike the regular deposits, interest here is calculated in grams and not in rupees. Thus, an investment of 500 grams of gold for three years shall earn 5 grams of gold as interest per annum, compounded annually. At the end of the maturity term, the interest so earned shall be converted into rupee equivalent of gold then and paid to the investor like other bank fixed deposit

For the principal investment, investor will have an option to claim back pure gold (0.999 purity) or cash equivalent of gold as on that day. The scheme is also attractive from tax perspective as the interest earned as well as tax on any capital gains arising from rise in price of gold after maturity is exempt from tax. Gold so deposited has also been exempted from wealth tax.

SBI has launched a Gold Deposit scheme to make use of privately held stock of gold and reduce country’s dependence on imported gold. This scheme was earlier launched in 1999 but was successful then. But we think this would be a good time for a bank to make use of high gold prices and thus would make a lot of sense now.

Q. What is the Purpose of Gold Deposit Scheme?

i. To mobilize the idle gold in the country and put it into productive use

ii. To provide you an opportunity to earn interest income on your idle goldholdings, with safety, liquidity and tax benefits.

Q. How it is used for productive purpose?

Your gold will be procured, assayed and converted into gold bars for lending to jewellers for manufacturing of gold jewelleries.

Q. What benefits I can get from Gold Deposit Scheme?

i. You can have safety & security of gold in Bank without any cost

ii. You can earn interest income on your idle gold

iii. You can avail loans in case of exigencies against your Gold Deposit Certificate from any branch of SBI

iv. Tax benefits- (As amended by Finance Act 1999)

a) You can save Income tax [under section 10(15)(vi) of Income Tax Act] on your interest earned from your gold deposit scheme

b) You can get exemption from Wealth Tax [under section 2(ea) of

Wealth Tax Act}) on the value of assets deposited in the scheme

c) You can get exemption from Capital Gain Tax [under section 2(14)(vi) of Income Tax Act]) on your deposit under the scheme.

Q. What is the minimum quantity of gold I can deposit?

A. You can deposit minimum 500 gms of gold in gross weight. There is no upper limit for such deposits.

Q. What are the periods for which I can keep the Deposit?

A. Gold Deposits are available for maturity periods of 3, 4 or 5 years (full year terms).

Q. How much Interest I can get?

A. The current interest rates are:

Tenure(full year term)

Rate of Interest

3 years

0.75% p.a.

4 years

1.00% p.a.

5 years

1.00% p.a.

Interest rates will be changed by the Bank from time to time which will apply to future deposits

 

Please click here to read more about this scheme    http://yourownadviser.com/articles/article_23

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Posted On : 20-04-2013
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