Gold Savings Schemes in India

Gold schemes in India allow individuals to consistently invest in gold, either through schemes sponsored by the government (such as Sovereign Gold Bonds (SGBs) and the Gold Monetisation Scheme (GMS) or through schemes with jewellers. Although SGBs offer the benefit of interest and tax advantages, schemes under jewellers allow someone to save gold methodically for buying jewellery later. Due to some recent changes in schemes by the government, individuals will want to understand differences in liquidity, returns, and tax consequences to ensure they select the best plan for their financial goals.

What is a Gold Savings Scheme?

A gold savings plan operates in the same manner as a recurring deposit to a bank, with one important distinction - the purpose of these schemes is to ultimately purchase gold. The premise of these plans is that the client pays a certain amount of money periodically for a fixed amount of time. When that duration ends, the amount built up can be used to purchase gold from the jeweller. Unlike a recurring deposit, a gold savings plan does not pay interest on the deposited amount. As attrition to this, the jewellers provide some incentive, either in the form of paying off the final installment, or some sort of discount or another benefit to the depositor.

Mukesh enrolled in a gold savings plan that requires him to pay ₹8,000 each month. The plan stipulates that he must make 10 complete payments, and after making the ten completions, he can receive 90% off the last payment from the jeweler.

Hence, Mukesh only made a total of ₹80,800 [(₹8,000 × 10) (₹8,000 × 10%)] and got a discount of ₹7,200. At the end of the term, Mukesh will have paid for gold worth ₹88,000 based on a purchase price of ₹80,800.

This option enables an individual to enjoy the all the benefits of a recurring deposit while also supporting them in attaining their long-term vision - being in possession of gold.

Here are some of the best gold saving schemes in India:

Jos Alukkas' Easy Buy Gold Purchase Plan

Through this online gold savings scheme, one can invest a fixed amount every month from ₹1,000 to ₹1 lakh of a period of 12 months followed by that amounts of money after submission of their monthly invested amount, a subscriber is entitled to buy gold at the amount you saved, plus promotional offer.

Key Features:

• Monthly Instalments : Pay ₹1,000 to ₹1 lakh for 12 months.

• Maturity : After 12 months, subscribers can purchase gold with the accumulated amount.

• Promotional Discount : Receive a discount (e.g., 90% of one month's instalment) after completing 12 payments.

• Gold Purchase : Buy 22k pure gold jewellery online or offline from Jos Alukkas' showrooms within 360 days.

• Purchase Window : Buy gold 30 days after the last instalment, but before 365 days from the joining date.

Example:

Geeta invests ₹5,000/month for 12 months, accumulating ₹60,000. She receives a ₹4,500 promotional discount, increasing her gold purchase value to ₹64,500.

Tanishq Golden Harvest Scheme

The Tanishq Golden Harvest Scheme is one of the most popular and best gold schemes in India which is a convenient and beneficial way to invest in gold.

Key Features:

• Monthly Instalments : You can invest a minimum of ₹2,000/month, with multiples of ₹1,000.

• Fixed Instalment Amount : Decide what your instalment amount will be, as this cannot be changed during the 10-month investment.

• Maturation : After investing for 10 months, your scheme will mature after the monthly contributions.

• Discount : After the 10-month investment period you will receive a discount equal to 75% of 1 month's instalment.

• Early Withdrawal : You are able to withdraw your gold and cash value anytime after 300 days, yet before 365 days, you'll get a discount of anywhere from 55% to 75%.

• Redemption : You can redeem the value of the total monthly instalments and discounts to receive pure gold of 22k or 18k of diamond encrusted jewelry from the store.

• Extra Bonus : You also can club your redemption value if there are any ongoing Tanishq offers for maximum extra benefit.

Example: Rajesh made an investment of ₹4,000/month for 10 months. When Rajesh withdrew after the 301st day he withdrew his deposit as well discounts totaling ₹42,200. [₹40,000 (₹4,000 x 55%).]

Malabar Gold and Diamonds' Smart Buy Plan

Malabar Gold and Diamonds offers the Smart Buy Plan, a unique gold savings scheme that allows customers to purchase gold jewellery at discounted prices.

Key Features:

1. Discounted Prices : Buy 'in stock' and 'out of stock' jewellery pieces at lower prices.

2. Future Delivery : For 'out of stock' items, jewellery will be manufactured and delivered on a future date.

3. Free Lifetime Maintenance : Enjoy free maintenance of your gold jewellery for life.

4. Free Insurance : Get one year of free insurance coverage for your gold purchases.

5. Gold Buyback : Benefit from Malabar Gold's gold buyback policy.

6. BIS Hallmarked 916 Gold : All gold purchased under this scheme is certified by the Bureau of Indian Standards (BIS) as 916 gold.

Important Considerations:

1. Upfront Payment : Pay for your jewellery in advance, as this scheme requires full payment upfront.

2. Non-Resizing Piece : Smart Buy is only applicable for pieces that don't require resizing. For resizing pieces, opt for the Smart Buy Customise option.

3. Financial Planning : Carefully assess your financial capacity, affordability, and investment goals before committing to this scheme.

By understanding these features and considerations, you can make an informed decision about investing in the Smart Buy Plan.

Kalyan Jewellers Gold Scheme

Kalyan Jewellers has a gold scheme of a 12-month duration where customers can invest in gold and redeem it after the contract.

Key Features:

• Flexible Instalments : Start paying into the scheme monthly for any amount between the range of ₹500 to ₹40,000, based on the jewellery selected.

• 12-Month Duration : The scheme is open for 12 months. After 12 months, you may close the contract and buy the gold you selected.

• Eligibility : The scheme is open to Indian citizens, trust funds, hedge funds, financial institutes, universities, and investments on behalf of minors.

This scheme is a flexible and convenient way to save for your gold purchase with the option to select your instalment amount and duration.

Gold Schemes from Banks

• The Budget of 2015 referred to Gold Schemes to incentivise the saving or deposit of idle gold in banks.

• This idle gold could then be lent to jewellers or used for other purposes.

• It requires the bank to pay the depositor interest, while jewellers can directly borrow gold from the bank.

• This way, the country can reduce its expenditure of foreign reserves on gold imports.

• These schemes allow us to deposit or invest in gold, or simply purchase gold.

• Prime Minister Narendra Modi has announced three different schemes - the Gold Monetization Scheme, the Sovereign Gold Bond Scheme and the Gold Coin and Bullion Scheme

Characteristics of Bank Gold Schemes Offered by Banks

A Gold Scheme works in the following way:

• Depositors must first obtain approval on the gold intended to be deposited.

• Approval will be made at an approved collecting centre, where purity will be verified.

• Once the gold has been verified, the gold can be deposited.

• The deposited gold is sent to a refinery for melting from the collecting centre.

• This is only done with the consent of the customer.

• The collecting centre issues a certificate for gold deposited, and taking that certificate to the bank enables a Gold Savings Account.

• Refiners of gold hold this deposited gold for a fee determined between them and the bank.

• Customers are not required to pay any fees to access this service.

Conclusion

India's gold investment schemes make it easy for people to put money into gold over time, allowing wealth to build gradually with steady investments. Gold savings schemes represent a regulated and relatively secure manner of investing in gold as well as providing potential benefits such as discounts and incentives for regular participation. It is important to choose the best scheme that suits your needs.