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Indian companies are starting to give their employees gold coins as incentives instead of cash


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In India as a reward for loyalty, government-owned companies, or public sector undertakings are offering gold instead of cash. The reason is in India gold can't be taxed the same way cash is when given as an incentive or gift. So some employers are starting to realize this benefit for their employees and following through. The employer does suffer a tax incidence though in terms of the fringe benefit tax (FBT). The fringe benefit tax for that said item is less of a percentage than what an individual would pay as a tax for receiving that said item.


Excerpts from the article:


“When cash is given as a form of incentive it becomes part of his income. As a result, the employee has to pay tax on the amount of cash given. However, in case of gold coin it becomes a gift, and hence, the employee does not have to pay tax. However, the employer is taxed under the fringe benefit tax,” said Ved Jain, a New Delhi-based tax expert.


Employees, no doubt, are pleased. An employee at PFC, who did not wish to be identified said: “It feels nice to receive it. If you get more and more such goodies you feel more committed. This also has increased our expectations.”



If your interested the full article is here and is called PSUs opt for gold coins to reward loyal staff and is by Utpal Bhaskar.

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"The Indian gold market, the largest in the world, is estimated at around 800 tonnes a year, of which the gold coin market is around 80 tonnes; of this, the size of the branded gold coin market is about 5%"


Judging by those numbers it would almost half to be bonds for most of the countries transactions.


According to: http://goldprice.org/goldcoins/2006/01/buy...s-in-india.html Indian banks were planning to sell gold coins at on point. I wonder if this is has anything to do with what Indian employers are doing now?


By the way does anyone know what they mean by the "branded gold coin market?"

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