Gold as an Investment 04 Sep 2017
Gold investments and gold jewellery have remained perennial favorites for many Indians. The trend has hardly changed over the years, though different types of gold investments have emerged in the Indian gold market. While buying any type of investment, some basic compliance becomes necessary to track the investments. The amount of documentation required when buying gold varies, but at most it is roughly comparable to that required when purchasing other savings instruments. Let us take a look at what you need to provide before buying physical gold or one of the various electronic forms of gold investment.
If an individual is buying gold jewellery from the Indian gold market worth less than Rs 2 lakhs, no documentation is required. The buyer can just walk into the jeweller’s shop and make the necessary purchases. This particular instance is one of the big advantages of gold, where there is no documentation required up to a certain limit.
However, it is important to note that purchasing gold jewellery worth over Rs 2 lakh would require a PAN card. Previously, a PAN Card was only required for jewellery purchases above Rs 5 lakhs. However, the government changed the rules with effect from Jan 1, 2016. Submitting PAN does not mean an individual is subject to taxes - it just brings about greater transparency and accountability and is a good practice. This has become even more necessary after the government's demonetisation drive.
Gold ETFs are another popular avenue of investment and have seen good fund flows in the past few years in the Indian gold market. To buy gold ETFs one needs to open a demat account and this would involve meeting "Know Your Customer" requirements. This means an individual would need proof of identity and a proof of address. As you will need to open a broking account as well as a demat account, your stock broker can advise on what documents qualify for providing this information (only certain types of document are approved as proof of identify/address).
Launched a couple of years ago, these are the latest addition to the ways you can invest in Indian gold market. These bonds are issued by the Government of India and can be purchased from post offices. Individuals can also buy these bonds through Sebi-recognized brokers in the country. Sovereign Gold Bonds require proof of address and identity before you can open an account to hold the investment. In short, you need to comply with the "Know Your Customer" requirements.
As can be seen from all the different investment avenues the simplest way to buy gold without any documents would be physical gold(as long as you buy under Rs 2 lakhs). Buying physical gold has always been the simplest and the easiest form of investment and that is unlikely to change. Even selling can be done easily without any documentation. This is why gold has always emerged as a favorite asset class, not to forget its consumption value.
Melt Value is the value of a coin based on the quantity of its constituent metals. It refers to the value of the precious metal that can be attained by melting the coin. For gold coins, it is the value of gold in the coin.
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