Gold Savings Scheme

If you are a true Indian at heart, you must be aware of how gold is more than just a precious metal. It is a symbol of wealth, tradition, and, most importantly, security. Be it weddings or festivals, gold plays a significant role in our lives. But buying gold at once can be really expensive on the pockets, especially for individuals coming from middle and lower income families. However, you do not need to be disheartened. A gold savings scheme can offer you a smart and easy way to invest in gold gradually instead of at once.

What is a Gold Savings Scheme?

Gold saving schemes are financial plans offered by jewelers or banks that allow you to invest in gold systematically. Instead of purchasing gold outright, you make regular monthly payments to build up a corpus over time. At the end of the scheme’s term, you can use your savings to buy gold at prevailing rates or, in some cases, benefit from additional incentives like bonus gold or discounts.

Think of it as a savings plan designed specifically for gold enthusiasts, helping you accumulate gold without breaking the bank.

Importance of Gold Saving Schemes in India

Gold has always held a special place in Indian households. This has led to the popularity of gold schemes in India. Some common reasons that make them a popular choice are:

• Tradition and Culture: Gold is an essential part of celebrations like weddings and festivals. With a gold saving scheme, you can plan and save in advance.
• Inflation Hedge: Gold is known to hold its value over time, making it a reliable investment during economic uncertainties.
• Financial Planning: These schemes encourage disciplined saving habits, ensuring you’re prepared for future gold needs.
• Affordable Investment: By making small monthly payments, you eliminate the financial strain of a one-time purchase.

Features & Benefits of Gold Schemes

Gold savings schemes are designed to be flexible and rewarding for anyone looking to make the most out of their gold assets. Let us take a look at some of the unique features and benefits of gold saving schemes:

• You can choose to deposit your gold for a period of 3, 4, or 5 years, depending on what works best for you.
• Whether it is gold bars, coins, or jewellery, all can be deposited under the scheme as it accepts multiple forms of gold.
• Once your gold is melted, tested, and minted, you will receive a Gold Deposit Certificate. This certificate is issued by the Government’s Nodal Branch and serves as proof of your deposit.
• The Gold Deposit Certificate will be issued to you within 90 days of making the deposit. You can hold up to 5 Gold Deposit Certificates at a time.
• The scheme requires a minimum deposit of 500 grams of gold, but there is no cap on how much you can deposit.
• A single-name nomination feature is available for added security and convenience.
• The scheme allows transfers through endorsement or delivery, but you will need to notify the Nodal Branch.
• At the end of the scheme’s tenure, you can either get back the equivalent gold as per the current rate or receive the principal amount in cash.
• Once the scheme matures, you can choose to renew it if you wish.
• If you need access to your gold early, you can withdraw it after a 1-year lock-in period, although a penalty may apply.
• You can avail of a loan worth up to 75% of the gold’s notional value at any State Bank of India (SBI) branch.
• You can enjoy tax advantages under income tax, capital gains tax, and wealth tax when you invest in this scheme.

Eligibility Criteria for Gold Savings Scheme

Eligibility for a gold savings scheme is straightforward to understand. While your eligibility can vary based on the scheme, in general, these are the standard requirements:

• You must be at least 18 years old or above
• Basic identification documents like an Aadhaar card, PAN card, or passport are needed
• You must be an Indian citizen and a member of a HUF (Hindu Undivided Family)

Pro tip: Always check the specific requirements of the jeweler or bank offering the scheme to avoid surprises.

How Do Indian Bank’s Gold Schemes Work?

When you opt for a gold investment scheme with a bank, the process is simple and transparent. Below is a step-by-step breakdown of the same:

• Choose a Plan: Select a scheme based on your budget and tenure.
• Make Regular Payments: Deposit a fixed amount monthly.
• Accumulate Gold: Your payments are converted into gold grams based on prevailing rates.
• Redeem at Maturity: At the end of the term, you can redeem your accumulated gold in the form of jewelry or bars.
• Additional Perks: Some banks offer added benefits like zero making charges for jewelry purchases.

Factors to Consider Before Investing in Gold Saving Schemes

Before jumping into a gold saving scheme, it is essential to weigh some key factors to make an informed decision:

• Reputation of Provider: Opt for trusted jewelers or banks to ensure the safety of your investment.
• Terms and Conditions: Carefully read the fine print to understand payment obligations and redemption policies.
• Gold Price Volatility: Gold prices fluctuate; know how this impacts your investment.
• Additional Costs: Watch out for hidden charges like making fees for jewelry.
• Tenure: Choose a scheme with a tenure that aligns with your financial goals.
• Tax Implications: Understand if there are any tax benefits or liabilities involved.

Conclusion

Gold saving schemes are an excellent option for anyone looking to combine financial planning with the allure of gold. Whether it is for a wedding, a festival, or an investment plan, these schemes make owning gold easy, affordable, and stress-free. By understanding how they work and what to consider, you can make the most out of your gold investments and find the best gold saving scheme for your needs.

FAQs on Gold Saving Schemes

1

Which is the best gold saving scheme in India?

The best gold saving scheme depends on your financial goals. Popular options include Sovereign Gold Bonds, bank gold deposit schemes, and jeweler-specific gold savings plans, each offering unique benefits like interest, security, or installment-based savings.

2

What forms of gold can be deposited with the scheme?

This depends on the scheme provider. Some accept only cash deposits to buy gold, while others, like banks, allow gold bars, coins, or jewelry (without stones) as deposits.

3

How is the value of gold calculated in the scheme?

Gold value is calculated based on the market rate on the date of purchase or maturity, depending on the scheme’s terms.

4

Is a minimum or maximum amount required to participate in a Gold Savings Scheme?

Yes, most schemes require a minimum monthly deposit, typically starting from ₹1,000. The maximum amount may vary by provider.

5

Do these gold savings schemes have tax benefits?

Yes, certain gold savings schemes offer tax benefits. For example, the interest earned is taxable, but the capital gains on redemption are tax-exempt. Always check the scheme’s terms for specific tax benefits.

6

Are gold schemes beneficial or risky?

Gold schemes are generally beneficial for disciplined savers and those looking to avoid market timing. However, risks include price volatility and potential hidden charges, so always do your homework.

7

What is the 6-month gold scheme?

A 6-month gold scheme is a short-term plan where you deposit monthly installments for six months. At maturity, you can purchase gold based on the accumulated amount and prevailing gold rates.

Suggested Readings

1. Gold Investment in India

2.How to Invest in Gold Through SIP?