A gold savings scheme (also called a jewellery purchase plan, kitty or bhishi scheme) brings customers back to the same shop every month and locks in their next big purchase. Done carelessly, it can also look like taking deposits, which is regulated. This guide explains how schemes are usually structured and what to record. It is general information, not legal advice: confirm your scheme's terms with your CA or lawyer.
How a typical scheme works
- The customer joins and pays a fixed instalment every month, for example ₹5,000.
- After 11 instalments, the jeweller adds a bonus, often the 12th instalment or a share of it.
- The customer buys jewellery for the total. The scheme money cannot be taken back as cash at maturity.
| Line | Amount |
|---|---|
| Paid by the customer (11 × ₹5,000) | ₹55,000 |
| Bonus from the jeweller (1 instalment) | ₹5,000 |
| Available for jewellery at maturity | ₹60,000 |
In a weight plan, each instalment buys gold at that day's rate for the purity (for example 22K), and the customer collects the grams saved. The customer is protected if the rate rises, and the jeweller knows how much metal is promised.
Why schemes run for 11 months: the 365-day rule
For companies, the Companies (Acceptance of Deposits) Rules, 2014 do not treat an advance received for the supply of goods as a deposit, provided the advance is appropriated against those goods within 365 days of accepting it. Jewellery schemes are built on this exception: every instalment must turn into jewellery within a year of being paid, which is why most schemes are 10 or 11 months long and why extending a scheme past a year is a problem.
The Banning of Unregulated Deposit Schemes (BUDS) Act, 2019 bans taking deposits under schemes that are not registered or regulated, and its penalties apply to any "deposit taker", not only companies. A scheme that promises cash back with a return, or keeps money beyond the period, can be treated as an unregulated deposit. Partnerships and proprietors should take advice on how their own scheme is classified.
Terms to write down and give the customer
- Instalment amount, number of instalments and the due day each month.
- The bonus, and when it is earned (only when all instalments are paid on time, or pro-rata).
- Grace days before an instalment counts as late.
- What happens on early closure: the deduction, and whether the balance is given as jewellery or refunded.
- That the amount is redeemed only against jewellery, and whether making charges, GST or gold coins are included.
- A nominee, in case something happens to the member.
GST on scheme instalments
GST applies when the jewellery is sold. Ask your CA how your instalments should be treated in your returns (as advances, and when the invoice is raised), and keep the instalment receipts linked to the final invoice so the trail is clear.
Records to keep for every member
- A scheme number, the plan, the start date and the nominee.
- Every instalment with a receipt number, date and payment mode.
- A passbook the customer can see, on paper or on WhatsApp.
- Late members, matured schemes, and the total of customers' money you are holding today.
- The invoice on which each matured scheme was redeemed.
The last figure matters most: the total you hold is money you owe in jewellery. Know it every day, not at year-end.
Questions customers ask
What happens if I miss a payment in a gold scheme?
Most schemes allow a few grace days. After that, the usual result is a smaller bonus or no bonus, as the written terms say. Because the money must be used for jewellery within a year of each payment, a missed month generally cannot simply be added to the end of the scheme; the shop will either let you pay the missed instalment late or close the scheme early. Read the terms on your passbook or scheme card before you join.
Can I exit a gold scheme early?
Usually yes, but the bonus is normally lost. Most jewellers let you buy jewellery with the amount paid so far; some refund it, often less a deduction. Ask what happens on early closure before you join and keep every instalment receipt.
Can I lock in today's gold rate for a purchase?
Many jewellers allow rate booking: you pay an advance and the shop holds the day's rate for a set weight until a date. The advance, how long the rate is held, and what happens if the rate falls or you cancel all vary by shop, so get them on the order receipt. A weight plan in a gold scheme does something similar month by month: each instalment buys gold at that day's rate.
Is a jeweller's gold scheme safe?
A scheme is only as safe as the shop running it. Prefer a scheme with written terms, a receipt for every instalment, redemption only in jewellery within 12 months, and no promise of cash returns, which the BUDS Act treats as a warning sign.
Common mistakes
- Letting schemes run past 12 months because a customer missed instalments.
- Paying out cash at maturity, which makes the scheme look like a deposit.
- No receipt for an instalment, leading to disputes at maturity.
- Bonus terms that are only spoken, not written.
Infovion JMS runs amount and weight plans with bonus rules and grace days, gives a receipt and passbook for every instalment, lists late and matured members with a one-tap WhatsApp reminder, and uses the matured amount and bonus straight on the bill. See gold scheme software in JMS.
Sources: Companies (Acceptance of Deposits) Rules, 2014, rule 2(1)(c)(xii); Banning of Unregulated Deposit Schemes Act, 2019; LiveLaw: Laws governing gold savings schemes.
