Finance Minister, Mr. Chidambaram made a statement today that people should refrain from buying Gold as every ounce of gold is imported in India which is paid in dollar value by Government.
I just want to ask honorable finance minister that, where people should invest their saving. Have you left any investment destination which doesn’t attract taxes. Yes only one, Gold. Its only because of strong lobbing of the Goldsmiths, the taxes on Gold are the least making it most attractive for investment. People know its not safe harbor as far as investment is considered, but they have no choice. Please re-look your investment taxing policies and bring/encourage products that offer better investment outlooks to people and you will never have to request people to refrain from buying (importing) gold.
One example which I can suggest is Bank / NBFC’s Fixed Deposits. Make them 100% tax free (just like recurring deposits without any upper caps) and kill two birds with single shot. First, you will see rise in advances in your banking system and secondly it will create gold alternatives investment destinations in system. FDs more attractive investment option for middle/ higher-middle income population (large portion of your saving pie) if the current clubbing with income & TDS regime is excluded. But alias in current system, a salaried individual pays tax on getting salary, runs his monthly expenses and when invest savings to generate some extra income, pays taxes again. If we can have double taxation treaties for industries, then why the middle/ higher-middle income group is not similar benefits. I am not suggesting you to blindly move FDs to 100% tax free regime and hurt your tax collection target, but give individual an opportunity to non-gold investment.
However, looking at the careless attitude of the government & bureaucrats towards common people, I think this would be definitely a distinct dream and Indian economy will surely suffer due to poorly conceived investment polices of Government.
- Buying Gold Coins as an Investment (coincollecting.answers.com)
- Indian Government to Banks: Stop Telling People to Buy Gold (marketcurator.com)