The Gold and Silver Merchants Association has urged the Centre to address tax-related concerns under the proposed Gold Monetization Scheme (GMS) 2.0, considering fears among families of possible Income Tax scrutiny over inherited gold that lacks purchase bills or supporting documents.
The government should provide clear legal protection and assurance for such cases, besides introducing simple, transparent KYC procedures and faster processing to strengthen public confidence in the scheme, said S. Abdul Nazar, General Secretary of the association.
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. “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,” he said.
To ensure the scheme’s success, the association has urged the government to include authorised jewellers as official partners, provide clear tax protection and guidance, simplify KYC and investment procedures, offer attractive interest rates to depositors, and establish a trusted ecosystem involving banks, jewellers and the government.
Nazar said one of the most significant reforms proposed under GMS 2.0 is the direct participation of jewellers. 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. 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, he added.
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. 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, he said.
Published on July 9, 2026
