NEW DELHI (TIP): The government is expected to limit deposits under the proposed gold deposit scheme at 100 grams to deal with concerns that the plan meant to put brakes on import of the precious metal may turn into a tool to convert undeclared assets into legitimate wealth.
Sources said the proposal has been discussed but a decision is yet to be taken. “We are looking at various options,” said an official. Others, however, pointed out that the contrary to what many believe, the proposed scheme has safeguards built into it through deposits only via banks where an individual has an account. “It automatically ensures that KYC (know-your-customer) norms have been followed and there is a history available with the bank,” said a source, familiar with the plan.
Finance minister Arun Jaitley had announced the gold deposit scheme in the budget with a view to mop up unused and idle assets, primarily from households, and offer 3-4% return to depositors. Under the Income Tax Act the returns are already tax-free, something that the consultation paper released recently reconfirmed.
After garnering gold from households as well as temple trusts, the government is hoping to send it for recirculation into the system, which is expected to reduce imports and ease pressure on the overall economy.
Sources, however, said RBI needs to settle a few issues before the government finalizes the scheme. The central bank, for instance, has not agreed to treat the gold mopped up by banks for meeting regulatory requirements such as maintenance of cash reserve ratio.