Gold Monetisation Scheme 2026: Status, Rates and Rules
Gold Monetisation Scheme in 2026: medium and long-term deposits closed in March 2025, what short-term bank deposits still pay, tax rules and how to deposit.
In this article
The Gold Monetisation Scheme (GMS) lets you deposit idle physical gold with a bank and earn interest on it. As of October 2026, only the short-term bank deposit (1 to 3 years) is still available, and only at banks that choose to offer it. The government discontinued the medium-term (5-7 years) and long-term (12-15 years) government deposits from 26 March 2025, which were the parts that paid 2.25% and 2.5%.
So if you have read older articles promising 2.5% on your jewellery, that option is closed to new deposits. What remains pays well under 1% at most banks. This guide explains what changed, what the short-term deposit offers today, the tax position, a worked example, and alternatives.
What happened in March 2025
| Component | Tenure | Status as of October 2026 |
|---|---|---|
| Short-Term Bank Deposit (STBD) | 1-3 years | Continues, at each bank's discretion |
| Medium-Term Government Deposit (MTGD) | 5-7 years | Closed to new deposits from 26 March 2025 |
| Long-Term Government Deposit (LTGD) | 12-15 years | Closed to new deposits from 26 March 2025 |
The Finance Ministry announced the change on 25 March 2025 after reviewing the scheme's performance and market conditions, and the RBI issued a circular the same day (RBI/2024-25/132). Existing medium and long-term deposits are not affected: they run until their redemption date under the old terms.
The scheme had mobilised only about 38 tonnes of gold by early 2025, a tiny share of the gold held by Indian households. Through mid-2026, news reports said the government was considering a revamped version in which jewellers would act as collection partners. As of October 2026 no revamped scheme has been notified, so treat any "GMS 2.0" offer you hear about with care until it appears on the RBI or Finance Ministry website.
Short-term bank deposit: the rules today
These are the rules as published by SBI, one of the main banks still offering GMS. Other banks can set different rates and may not offer the deposit at all.
- Who can deposit: resident Indians, including individuals (single or joint), HUFs, proprietorships, partnership firms, trusts, companies and charitable institutions.
- Minimum: 10 grams of raw gold (bars, coins or jewellery, excluding stones and other metals). No maximum.
- Tenure: 1 to 3 years.
- Interest (SBI): 0.50% a year for 1 year, 0.55% for above 1 to 2 years, 0.60% for above 2 to 3 years.
- How interest is paid: in rupees, worked out on the value of the gold at the time of deposit, either every year on 31 March or cumulatively at maturity.
- Interest start: from the date the gold is converted into tradable bars after refining, or 30 days after receipt, whichever is earlier.
- Repayment: in gold of the deposited weight, or the rupee equivalent at maturity. You make this choice when you deposit and cannot change it.
- Premature withdrawal: allowed after a lock-in of 1 year, with a penalty.
How the deposit works step by step
- Ask your bank branch whether it accepts GMS short-term deposits and which Collection and Purity Testing Centre (CPTC) it works with.
- Take your gold to the CPTC with your KYC documents (identity proof, address proof). The centre first does a preliminary XRF test in front of you.
- Give consent to melt. If you agree, the gold is melted and a fire assay determines its exact purity. If you do not accept the fire assay result, the scheme rules let you take back the melted gold, usually after paying the centre's fee; you will not get the ornaments back in their original form.
- Receive a certificate stating the weight of 995-purity gold credited.
- The bank opens your gold deposit account and issues a deposit certificate in grams.
- At maturity, collect gold or rupees as you chose.
Ask the bank in writing about any testing, melting or refining charges before you go. Deposit only through a bank branch or the CPTC the bank names. Do not hand jewellery to people who claim to be "GMS agents" and promise higher interest; that is not how the scheme works.
Worked example: depositing 100 grams of 22-carat jewellery
Suppose you deposit 100 grams of old 22-carat jewellery (91.6% pure) with no stones. For illustration only, assume the value of 995-purity gold is ₹10,000 per gram on the deposit date.
| Step | Calculation | Result |
|---|---|---|
| Pure gold content | 100 g × 91.6% | 91.6 g of fine gold |
| Credited as 995 gold | 91.6 ÷ 0.995 | 92.06 g |
| Value at deposit | 92.06 g × ₹10,000 | ₹9,20,600 |
| Yearly interest at 0.60% (3-year deposit) | ₹9,20,600 × 0.60% | ₹5,524 a year |
| Total over 3 years (paid yearly) | ₹5,524 × 3 | ₹16,572 |
| Cumulative at maturity (compounded yearly) | ₹9,20,600 × (1.006³ − 1) | about ₹16,670 |
At maturity you get 92.06 grams of 995 gold back (or its rupee value then), so any change in the gold price is yours, plus about ₹16,600 of interest. You lose the ornaments and their making charges for good. If the jewellery was worth more to you as jewellery, GMS is a poor trade.
Compare that with keeping the jewellery in a bank locker, which costs a yearly rent and earns nothing; see our guide to bank locker rules and charges. If you need cash rather than income, a gold loan lets you borrow against jewellery without giving it up.
Tax on GMS deposits
Under the Income-tax Act, 1961, interest on gold deposit certificates issued under the scheme was exempt, and the certificates were excluded from the definition of capital asset, so converting jewellery into a GMS deposit and redeeming it did not trigger capital gains tax. The scheme's own notification says the tax treatment is as notified by the government from time to time.
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered many sections. Before you deposit a large quantity, ask your bank or a tax adviser which provision of the new Act carries over these exemptions, and keep the deposit certificate and assay report for your records.
GMS short-term deposit vs other ways to hold gold
| Option | Return beyond gold price | Risk and costs |
|---|---|---|
| GMS short-term deposit | About 0.5%-0.6% (SBI), in rupees | Jewellery is melted; lock-in 1 year |
| Gold ETF | None; expense ratio reduces return | Market-linked; demat or MF route |
| Sovereign Gold Bonds (existing holders) | 2.5% a year on issue price | No new tranches issued since February 2024 |
| Physical jewellery at home | None | Theft risk, locker rent, making charges |
New Sovereign Gold Bond issues have not been made since February 2024, so for new money the realistic options are gold ETFs, gold mutual funds or the GMS short-term deposit. Read gold ETF vs SGB vs digital gold for costs and taxes, and stocks vs bonds vs gold for how much gold makes sense in a portfolio.
Problems and where to complain
- Dispute over purity or weight: raise it at the CPTC before consenting to melting, and get the XRF and fire assay results in writing.
- Interest not credited or wrong maturity amount: complain to the bank branch, then the bank's grievance redressal officer.
- No reply in 30 days: file a complaint with the RBI Integrated Ombudsman at cms.rbi.org.in.
Key takeaways
- Medium and long-term GMS deposits, which paid 2.25%-2.5%, closed to new deposits from 26 March 2025; existing ones run to maturity.
- Only the 1-3 year short-term bank deposit remains, at banks that choose to offer it; SBI pays 0.50%-0.60%.
- The minimum is 10 grams; jewellery is melted, and you get back gold by weight or its rupee value, not your ornaments.
- A jeweller-led revamp has been discussed but was not notified as of October 2026.
- For new investment, compare gold ETFs; for cash needs, a gold loan keeps your jewellery intact.
Frequently asked questions
Is the Gold Monetisation Scheme discontinued?
Partly. The government stopped the medium-term and long-term government deposits from 26 March 2025. Banks may still offer the short-term bank deposit of 1 to 3 years at their discretion, and existing medium and long-term deposits run until maturity.
What interest does the Gold Monetisation Scheme pay in 2026?
Short-term deposit rates are set by each bank and are low. SBI's published rates are 0.50% for 1 year, 0.55% for above 1 to 2 years and 0.60% for above 2 to 3 years, paid in rupees. Check your bank for its current rate.
What is the minimum gold for the Gold Monetisation Scheme?
The minimum is 10 grams of raw gold, which can be bars, coins or jewellery excluding stones and other metals. There is no maximum.
Will I get my jewellery back under the Gold Monetisation Scheme?
No. Jewellery is melted and refined, and your deposit is recorded as grams of 995 purity gold. At maturity you get gold of that weight or its rupee value, as chosen at deposit, not your original ornaments.
Is Gold Monetisation Scheme interest taxable?
Under the old Income-tax Act, interest on gold deposit certificates under the scheme was exempt and the certificates were not treated as capital assets. Confirm the corresponding provision under the Income-tax Act, 2025 with your bank or tax adviser before relying on it.
Is there a new Gold Monetisation Scheme with jewellers?
Through 2026 there were reports that the government was considering a revamp that would let jewellers collect gold for the scheme, but no revamped scheme had been notified as of October 2026.
This article is for general education and is not personalised financial, tax or legal advice. Rates and rules are as of 25 Oct 2026; confirm current terms with your lender, AMC or a qualified adviser.
