By Nitin Baijal, Director, BMR Advisors
Q: My mother has Rs. 1.2 crore worth of gold jewellery accumulated over years which she plans to gift me. Now I want to sell Rs. 50 lakh worth of jewellery for the down payment of my house. How will the tax arising from the jewellery sale be calculated? What should I do to avoid tax?
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Nitin Baijal, Director, BMR Advisors |
Nature of capital Gains..!In case you sell such gifted jewellery at a later date, you would be liable to pay capital gains tax on the same. For determining the nature of capital gains, the period for which such asset is held by your mother shall also be considered.
Thus, if the total period of holding of the jewellery by you and your mother exceeds 36 months (3 Years), such gains shall be taxable as long-term capital gains at the rate of 20% (plus applicable cess and surcharge).
Short-term capital gains..!
Else, such gains would be chargeable to tax as short-term capital gains at the rate of 30% (plus applicable surcharge (2%) and cess (1%) or the purpose of computation of capital gains, the indexed cost of acquisition of the jewellery sold shall be deducted from the full value of consideration received for such jewellery.
Cost Inflation Index..!
The indexed cost of acquisition has to be determined with reference to the cost inflation index for the first year in which the jewellery was held by your mother.
Further, as per the provisions of section 54F of the Act, the long term capital gains arising on the transfer of the jewellery can be claimed as an exemption if another residential house is purchased within a period of 1 year before or 2 years after or constructed within a period of 3 years after the date of transfer of the jewellery.
Capital Gains Account Scheme..!
However, if the amount is not invested before the date of filing of the return of income, then the proposed investment should be deposited in a Capital Gains Account Scheme and invested therefrom in the aforesaid time limits.
If the cost of the new residential house is more than the net consideration received on the transfer of the jewellery, the entire capital gains shall be exempted from tax. If the cost of the new residential house is less than the net consideration received on the sale of jewellery, then the amount of capital gains exemption shall be a proportion of the amount invested as against the net consideration received.
Src: livemint
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