Draft gold monetising policy to bring out unproductive yellow metal remains quiet on interest.

In a bid to unlock the estimated hoard of over 24,000 tonnes of gold worth `63 lakh crore in the country, the government has unveiled a draft scheme which allows you to deposit a minimum of 30 gms of the yellow metal in a bank, in return of tax-free interest. The rate of interest will be decided by the banks. You will have to bear the melting charges, the cost of testing, fire assaying and stone removal charges.

If we assume the rate of interest fixed by the banks will be 1%, then a customer depositing 100 gm of gold stands to gain credit of 101 gm on maturity. Experts have said only a higher rate would lure hoarders into parting with the yellow metal.

The government wants the scheme to bring gold into circulation. India imports nearly 1,000 tonnes of gold a year.

The intention to exempt deposits and income from capital gains tax, wealth tax and income tax could get gold hoarders to take part in the scheme.

According to him, the depositor should have the flexibility to decide whether he or she will redeem the deposit in gold or cash at maturity.

The draft doesn't say if depositors need to provide proof of purchase or payment of wealth tax in the past. Not requiring these will increase comfort and encourage HNIs to make use of the gold scheme, experts said.