• Selling gold jewelry

1. I have Received Gold Jewelry approx. weight 1.5 kgs from my parents after my parents expires in 2011.

2. I don't have any document related to that Gold Jewelry.

3. I want to sell that Gold Jewelry.

4. On what basis shall be the cost price of Gold for the purpose of calculating Capital Gains Tax on selling of Gold Jewelry?
Asked 12 days ago in Capital Gains Tax

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:

    • LTCG=Sales Consideration−Indexed Cost of AcquisitionLTCG=Sales ConsiderationIndexed 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,

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
251 Answers
4 Consultations

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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

 

Vivek Kumar Arora
CA, Delhi
4871 Answers
1058 Consultations

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Calculating Capital Gains on Sale of Property Converted to Commercial

To calculate the capital gains tax on the sale of a property that was converted from residential to commercial, follow these steps:

  1. Determine the Original Cost of Acquisition:


    • Residential Purchase Value in 1996: ₹2,00,000

  2. Indexation of the Original Cost:

    • Use the Cost Inflation Index (CII) to adjust the original purchase value for inflation.

    • CII for 1996-97: 305

    • CII for 2024-25: 348 (assumed)

    Indexed Cost of Acquisition:

    Indexed Cost of Acquisition=Purchase Value×CII of Year of Sale/CII of Year of Purchase =2,00,000×348305=2,28,852

  3. Cost of Construction (2008):

    • Include the cost incurred for constructing 4 stories in 2008.
    • Assume the cost of construction is ₹10,00,000.

    • CII for 2008-09: 137

    Indexed Cost of Construction:

    Indexed Cost of Construction=Construction Cost×CII of Year of Sale/CII of Year of Construction= 10,00,000×348​/137=25,40,146

  4. Conversion Charges:

    • Include any conversion charges paid for converting the property from residential to commercial.
    • Assume conversion charges are ₹2,00,000.

    Indexed Conversion Charges:

    Indexed Conversion Charges=Conversion Charges×CII of Year of Sale/CII of Year of Conversion=2,00,000×348/137=5,08,029

  5. Total Indexed Acquisition Cost:

    Total Indexed Acquisition Cost=Indexed Cost of Acquisition+Indexed Cost of Construction+Indexed Conversion Charges =2,28,852+25,40,146+5,08,029=32,77,027

  6. Sales Consideration:

    • Calculate based on the commercial circle rates (3 times higher than residential).
    • Assume the residential circle rate is ₹20,000 per sq yard, and commercial rates are 3 times higher:

    Sales Consideration=150 sq yards×₹20,000×3=₹90,00,000

  7. Capital Gains Calculation:

    LTCG=Sales Consideration−Total Indexed Acquisition Cost =₹90,00,000−₹32,77,027=₹57,22,973

  8. Tax on LTCG (20%):

    Tax=20%×₹57,22,973=₹11,44,595

Valuation Certificate Assistance:

Yes, I can assist in obtaining a valuation certificate from a registered valuer. For detailed assistance and to get a valuation certificate.

Best regards,

For detailed, personalized advice, consider a phone consultancy.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
251 Answers
4 Consultations

5.0 on 5.0

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