Tax on sale of jewellery

hiten (Querist) 12 June 2012 This query is : Resolved
Dear All,

Please guide if i am selling jewellery given by my grandfather, for buying an property. If i give the sale proceeds to my parents for bying the property what will be the tax effect on me and my parents?

Thanking you all in anticipation.

Please assist.

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Sankaranarayanan (Expert) 12 June 2012
selling the jewelary to whome. how much amount you going to invest for buy property, need more details about it

A V Vishal (Expert) 12 June 2012
Jewellery qualifies to be a capital asset according to the tax laws in India. Any income arising from its sale will be taxed as capital gains.

In case the capital asset is held for more than 36 months, the gain from its sale would be taxable as long term capital gains and benefit of indexation will be available.

The amount received on sale of jewellery is regarded as full value of consideration in order to compute the capital gains. Fair Market Value of jewellery can be considered as the cost of acquisition of the assessee. There are authorised valuers who can assist in calculating this value.

Capital gains so computed may be claimed as exempt in case it is invested in accordance with the terms and conditions as specified under section 54EC (i.e. the gain is invested in the long term specified asset) or/and section 54F (i.e. purchase/construction of residential house) etc. of the I-T Act, 1961.

Vineet (Expert) 15 June 2012
if the jewellery is being sold to buy residential property, it is advised that you buy the property in your name to avail capital gains exemption advantage under section 54F of the Income Tax Act.

Gifting the sale proceeds of jewellery to your parents will not have any tax implication in hands of your parents. But then you will have to pay capital gains tax in your hand.