Author: Paul Ploumis25 May 2015 Last updated at 08:35:22 GMT
MUMBAI (Scrap Monster): The government needs to ease the voluntary disclosure limit in order to ensure success of the proposed gold monetization scheme. Tight disclosure norms are likely to stop customers from depositing gold into the scheme. According to Rajesh Khosla, Managing Director, MMTC-PAMP India, individuals must be exempted from disclosure details for gold deposits of at least Rs 7 lakhs to Rs 10 lakhs.
The draft guidelines on gold monetization scheme announced last week has not mentioned anything regarding the voluntary disclosure limit. In line with income tax regulations, at least Rs 10 lakhs worth of gold must be allowed to be deposited without having to disclose the source. He added that majority of gold that come into the scheme will be old ancestral gold from households or gold offerings from temples, for which no receipt will be available. Raising the limit to Rs 7 lakhs will allow deposits of up to 250 grams without the need for any disclosure.
According to Pankaj Parekh, Vice Chairman, Gems & Jewellery Export Promotion Council (GJEPC), the government should provide more clarity on interest rate offered on gold deposits. The lack of adequate assaying infrastructure must also be looked into, before the final product is launched. As per industry sources, many of the gold refining centres in the country do not have vault facilities to store the deposited gold.
The gold monetization scheme declared in 1999 failed due to three key reasons. The 500 grams minimum deposit weight found few takers. In addition, delay in purity verification procedures and nominal 1% interest offered on gold deposits made the scheme unattractive. The draft guideline released last week, brings down the minimum deposit weight to 30 grams. It further promises speedy assaying procedures. However, no mention is made regarding interest rate offered to gold deposits, although trade expectation range between 2% and 3.5%.