The Gold and Silver Merchants Association has urged the Centre to address tax-related concerns under the proposed Gold Monetization Scheme (GMS) 2.0, according to reports from The Hindu BusinessLine. The association is particularly concerned about families' fears of possible Income Tax scrutiny over inherited gold that lacks purchase bills or supporting documents. S. Abdul Nazar, General Secretary of the association, emphasized that the government should provide clear legal protection and assurance for such cases, alongside introducing simple, transparent KYC procedures and faster processing to strengthen public confidence in the scheme. The association's concerns mirror broader tax considerations, as tax advantages are crucial for any monetization scheme to attract participation and ensure success in mobilizing India's vast idle gold holdings.
Describing GMS 2.0 as more than just a gold investment programme, Nazar said it should be viewed as a national mission to convert India's vast idle gold holdings into a productive economic resource, as reported by The Hindu BusinessLine. He stressed that the success of the scheme will depend not only on rules and procedures but also on public trust, the credibility of jewellers, the security offered by banks, and strong policy support from the government. The association has urged the government to include authorised jewellers as official partners, provide clear tax protection and guidance, simplify KYC and investment procedures, and offer attractive interest rates to depositors. This strategic approach recognizes that the scheme's effectiveness will hinge on creating a trusted ecosystem that addresses both regulatory concerns and public confidence issues.
According to The Hindu BusinessLine, one of the most significant reforms proposed under GMS 2.0 is the direct participation of jewellers. Nazar highlighted that in Kerala, where customers have long-standing relationships with local jewellers, people are more likely to entrust their gold to a familiar jeweller than to a bank, making jewellers a crucial pillar for the scheme's success. Most jewellers currently rely on bank borrowings and gold loans for working capital, and access to low-cost gold mobilised through GMS could substantially reduce financing costs while enabling new business models, such as accepting old jewellery as deposits and offering interest payments or new jewellery in return. The jeweller participation model demonstrates how local relationships and trusted intermediaries can bridge the gap between traditional gold holdings and formal financial systems.
As reported by The Hindu BusinessLine, the introduction of the first gold monetization scheme in 2015 had failed to elicit response due to lack of consumer confidence. There are reports that 25,000 to 30,000 tonnes of gold are lying idle with households and religious institutions. Nazar noted that if five per cent of this gold is brought to the financial system offering attractive interest rates, the import bill for the yellow metal can be reduced substantially. The association emphasizes the need to establish a trusted ecosystem involving banks, jewellers and the government to ensure the scheme's success, recognizing that previous failures underscore the importance of addressing both regulatory and public confidence issues in the new iteration.
