• Tax on gold sold

Hi recently I sold gold jewellery which I had got during marriage in 1980 for rs 6 lacs since my son had to buy a house.what r the tax implications and how can I avoid paying tax or pay minimum tax.
Asked 5 years ago in Income Tax

It will be taxed as capital gain tax i.e. long term capital gain and for calculating long term capital gain you need to get it's fair market value as on 01.04.2001 and then indexed it and reduce it from the sale price and you will get the long term capital gain amount and you have to pay tax @20% on such gain.

Just get the valuation of such jewellery from a jeweller as on 01.04.2001.

And you won't have to pay any tax if you invest such amount in a residential house. If you gift that amount to your son and he invest that amount in house then you will have to pay tax on such capital gain however if you invest the entire sale consideration of that jewellery in your son's house and then gift him the house then you won't have any capital gain tax.

You can have a consultancy session if you have any query or want any further information.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
4265 Answers
96 Consultations

5.0 on 5.0

Dear Sir,

Hope you are doing well !

You would be liable to pay Long term capital gain at the rate of 20% (plus applicable cess and surcharge) on any capital gains that arise from the sale of gold.

You need to get the fair market value of gold as on 01.04.2001 for calculation of indexed cost of acquisition.

Long-Term Capital Gains will be calculated as below:

Start with the full value of consideration

Deduct the following:

Expenditure incurred wholly and exclusively in connection with such transfer

Indexed cost of acquisition

Indexed cost of improvement

From this resulting number, deduct exemptions provided under sections 54EC, 54F,

This amount is a long-term capital gain.

You may take the benefit of exemption either by reinvesting in a residential house property u/s 54F and or by investing in 54EC eligible bonds.

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
5188 Answers
288 Consultations

5.0 on 5.0

Dear Sir,

Capital Gains will be applicable on sale of Gold. As your holding period is more than 3 years, the Gold you possess is Long Term Capital Asset and you will be charged with Long Term Capital Gains. Long Term Capital Gains will be charged at 20% with Indexation Benefit. For more details please feel free to reach out to me.

Thanks and Regards

Praneeth Thunuguntla

Praneeth Thunuguntla
CA, Guntur
56 Answers
1 Consultation

Not rated

Hi,

- Please share the sale value of jewellery. At the time of marriage it was of Rs.6 lacs.

- Get the valuation of jewellery as on 01.04.2001 and multiply it by 2.80 to get the Indexed COA.

- Deduct the ICOA from sale value to arrive at the capital gain figure.

- You should take the new house in your name to claim exemption.

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1031 Consultations

5.0 on 5.0

Hi,

You will be required to pay capital gain tax on the same. You need to check to cost of jewelryas on 1.4.2001 and then mutiply it with 2.8. It will be your indexed cost of purchase ( say A).

Now, substract 'A' from the sale value of 6 lacs and you will get your capital gain. You will have to pay 20% tax on capital gain value.

If you want to avoid tax payment, you can invest capital gain amount in NHAI/ REC bonds for 5 years.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

You will have to pay 20% tax on capital gain arising on sale of gold.

Capital gain = sale value minus indexed cost of acquisition

Indexed cost of acquisition = gold value as on 1.4.2001 * 2.8

You can save tax if you invest in eligible bonds within 6 months from the date of sale.

Lakshita Bhandari
CA, Mumbai
5687 Answers
909 Consultations

5.0 on 5.0

Hi,

You will have to pay capital gain tax @20.8%.

Capital gain = Sales consideration minus indexed cost of acquisition (Gold value as on 01.04.2001*2.8)

However, you can take the benefit of exemption by investing in eligible fund u/s 54EC.

Karishma Chhajer
CA, Jodhpur
2450 Answers
29 Consultations

5.0 on 5.0

Hi,

Jewellery is considered as capital asset as per the Income Tax Act.

Hence Long term capital gain shall be attracted in this case as the period of holding is more than 6 years.

As the jewellery was received by you on occasion of your marriage you shall have to get the cost of acquisition from certified valuer as on 01.04.2001 as the base year has been shifted to 2001-02 from 1980-81. On the basis of same you can calculate indexed COA.

For E.G. the value determine by certified valuer as on 01.04.2001 is say 150,000 the on the basis of indexation the indexed cost of acquisition shall be 4,20,000(150000*280/100). The LTCG in this case shall be Rs.1,80,000 and tax on same shall be Rs.37,440 (20.8%including education cess @4%).

Hope this resolves your queries!

Siddhant Shah
CA, Mumbai
120 Answers
1 Consultation

5.0 on 5.0

You will need to pay Long term capital gain on the sale of jewellery. You will need to get the valuation of the jewellery done as on 01.04.2001 by a certified valuer. You can get indexation benefit on this cost to ascertain the cost as of today for capital gains purposes. The differential of the sales proceeds and indexed cost will be your capital gains on which you will need to pay taxes.

Hope that clarifies.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi

Such sale will attract long term capital gain tax .get cost of jewelry as on 01.04.2001 and multiply it with 2.8 to get indexed cost of purchase of jewellary.

Deduct such value form Sale price ,you will get Gain fig and pay taxes on this amount @ 20.6%.

You can invest in bonds under sec 54ec within 6 month of sale in order to save tax.

Hope it helps.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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