Selling gold jewelry

Steps to Calculate Capital Gains Tax on Selling Inherited Gold Jewelry in India

1. Fair Market Value (FMV) as on 1st April 2001:

   • Get the jewelry valued by a registered valuer for its worth on 1st April 2001.

2. Indexation of Cost:

   • Use the Cost Inflation Index (CII) to adjust the FMV.
   • Formula: Indexed Cost of Acquisition=FMV as on 1st April 2001×CII of Year of SaleCII of Year 2001-02Indexed Cost of Acquisition=CII of Year 2001-02FMV as on 1st April 2001×CII of Year of Sale​
     

3. Calculate Capital Gains:

   • $\text{LTCG}=\text{Sales Consideration}-\text{Indexed Cost of Acquisition}$

4. Tax Rate:

   • Long-term capital gains are taxed at 20% with indexation.

Example Calculation

• 
  FMV as on 1st April 2001: ₹5,00,000
• 
  CII for 2001-02: 100
• 
  CII for 2024-25: 348
• 
  Indexed Cost: ₹5,00,000×348100=₹17,40,000100₹5,00,000×348​=₹17,40,000
  
• 
  Sales Consideration: ₹90,00,000
• 
  LTCG: ₹90,00,000 - ₹17,40,000 = ₹72,60,000
• 
  Tax on LTCG: 20% of ₹72,60,000 = ₹14,52,000

Risk and Evidence

• 
  Risk: The Income Tax Department may question the inheritance.
• 
  Evidence: Gather documentation or statements from family members to prove the inheritance.

Best regards,

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Shubham Goyal

In respect to the sale of jewellery 

It is a case of inheritance of asset. In such cases, cost to the previous owner is deemed as cost of acquisition to the assessee. In the same manner holding period is determined. Assuming jewellery was obtained by parents before 01.04.2001, in such case you can obtain the fair market value of the jewellery as on 01.04.2001 through a registered valuer. FMV as on 01.04.2001 or cost price whichever is higher can be considered as cost of jewellery for the purpose of calculation of LTCG. You have the option to reinvest the sale proceeds in the residential house property and claim exemption u/s 54F

In respect to sale of property

As the property was purchased before 01.04.2001, obtain stamp duty value of the property as on 01.04.2001. Deduction in respect to cost of construction incurred is allowed subject to proof of payments and proof of expenditure incurred. You have the option to reinvest the sale proceeds in residential house property and claim deduction u/s 54F or you can invest in bonds u/s 54EC

For detailed discussion you may opt for phone consultation