Budget 2016: Capital gains tax on gold monetisation scheme removed; interest to be tax-free

By: | Updated: February 29, 2016 5:48 PM

Finance Minister Arun Jaitley also proposed to make make interest on Deposit Certificates issued under the gold monetisation scheme exempted from income-tax.

Gold monetisation schemeFinance Minister Arun Jaitley also proposed to make make interest on Deposit Certificates issued under the gold monetisation scheme exempted from income-tax. (Photo: Reuters)

Deposit Certificates issued under the Gold Monetisation Scheme (GMS), 2015 will be exempted from capital gains tax by excluding them from the definition of capital asset under the Income Tax Act.

Finance Minister Arun Jaitley also proposed to make make interest on Deposit Certificates issued under the GMS exempted from income-tax.

These amendments are proposed to be made effective retrospectively from the 1st day of April, 2016 and shall accordingly apply in relation to assessment year 2016-17 and subsequent years.

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The move has been done to bring the Gold Monetisation Scheme at par with the Gold Deposit Scheme, 1999. Under the existing provisions, interest on Gold Deposit Bonds issued under Gold Deposit Scheme, 1999, is exempt.

Further, these bonds are excluded from the definition of capital asset and therefore exempt from tax on capital gains.

The Gold Monetisation Scheme, 2015 has since been introduced by the Government of India. According to the Budget, wth a view to extend the the same tax benefits to the scheme as were available to the Gold Deposit Scheme, 1999 it is proposed “to amend the relevant provisions so as to exclude Deposit Certificates issued under Gold Monetisation Scheme, 2015 notified by the Central Government, from the definition of capital asset and thereby to exempt it from capital gains tax.” according to Budget papers.

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