Capital gain on gold purchase
This query is : Resolved
30 November 2011
Kindly Inform Me whether any capital gain arise while I sold Gold in as.yr.09-10 which is received as marriage gift or gift from parents
30 November 2011
Yes capital Gains arises as jewellery or articles made of gold are treated as capital asset. Cost of Previous owner, will be considered as cost of acquisition and if the same is acquired by them before 3 years of Sale, indexation will be allowed.
01 December 2011
Thankx a lot sir,
will you pleas to inform me,that in a case where there is no proof of purchase or holding of that gold which is assumed that received from parents as gift,and it is sold out,but the assess has filed only wealth tax return just for 1 year before sold that gold,in this case what can do the A.O.for sale proceed recd for that gold,can he add all sale proceed as income and can he issue also a pnelty notice u/s.271(1)
sir,please reply soon
will you pleas to inform me,that in a case where there is no proof of purchase or holding of that gold which is assumed that received from parents as gift,and it is sold out,but the assess has filed only wealth tax return just for 1 year before sold that gold,in this case what can do the A.O.for sale proceed recd for that gold,can he add all sale proceed as income and can he issue also a pnelty notice u/s.271(1)
sir,please reply soon
01 December 2011
sir,
will you please in form me that in a case where there is no proof of purchase or holding of that gold which is assumed that recd from parents as gift,and it is sold out but the assess has filed only wealth tax return just for 1 year before sold that gold,in this case what can do the A.O.for sale proceed recd for that gold?
can he add all sale proceed as income ?
can he issue a penalty notice u/s 271(1)c?
will you please in form me that in a case where there is no proof of purchase or holding of that gold which is assumed that recd from parents as gift,and it is sold out but the assess has filed only wealth tax return just for 1 year before sold that gold,in this case what can do the A.O.for sale proceed recd for that gold?
can he add all sale proceed as income ?
can he issue a penalty notice u/s 271(1)c?
18 July 2024
In the scenario where you received gold as a gift (either as a marriage gift or from parents) and subsequently sold it, here are the implications and considerations regarding capital gains tax and potential penalties:
### Capital Gains Tax Implications:
1. **Nature of Receipt**:
- Gold received as a gift from parents or as a marriage gift is considered a capital asset under the Income Tax Act, 1961.
2. **Cost of Acquisition**:
- Since the gold was received as a gift, the cost of acquisition for computing capital gains will be considered as Nil, as per Section 49(1)(iii) of the Income Tax Act.
3. **Capital Gains Calculation**:
- Capital Gains = Sale Proceeds - Cost of Acquisition
- Since the cost of acquisition is Nil, the entire sale proceeds will be considered as capital gains.
4. **Tax Rate**:
- If the gold was held for more than 3 years (making it a long-term capital asset), the capital gains will be taxed at 20% with indexation benefit (if applicable).
5. **Filing Requirements**:
- You should report the capital gains in your Income Tax Return (ITR) for the relevant assessment year (AY) in which the sale took place (AY 2010-11 based on your example).
### Wealth Tax Return and Penalty Considerations:
1. **Wealth Tax Return**:
- Filing a wealth tax return does not fulfill the requirement for reporting capital gains. Capital gains from the sale of assets (like gold) need to be reported in the Income Tax Return (ITR).
2. **Assessment by AO**:
- If the Assessing Officer (AO) finds that you sold gold and did not report the capital gains in your ITR, they may initiate proceedings to assess the undisclosed income.
- The AO has the authority to add the entire sale proceeds as income and tax it accordingly.
3. **Penalty Under Section 271(1)(c)**:
- Section 271(1)(c) deals with penalties for concealment of income or furnishing inaccurate particulars of income.
- If the AO finds that there was deliberate concealment or inaccurate reporting of income (including capital gains), they may initiate penalty proceedings under this section.
### Recommendations:
- **Documentation**: Even though you received the gold as a gift, it's advisable to maintain documentation and evidence of the gift received, such as a gift deed or any other proof of transfer.
- **Tax Compliance**: Ensure that you accurately report all capital gains from the sale of gold in your Income Tax Return (ITR) for the relevant assessment year.
- **Consultation**: Given the specific circumstances and potential tax implications, consider consulting with a tax advisor or chartered accountant who can provide personalized advice and assist in compliance with tax regulations.
In summary, while there may be no cost of acquisition for the gold received as a gift, you are still required to report the capital gains from its sale in your Income Tax Return. Failure to do so may lead to penalties and additional tax liabilities as determined by the Assessing Officer.
### Capital Gains Tax Implications:
1. **Nature of Receipt**:
- Gold received as a gift from parents or as a marriage gift is considered a capital asset under the Income Tax Act, 1961.
2. **Cost of Acquisition**:
- Since the gold was received as a gift, the cost of acquisition for computing capital gains will be considered as Nil, as per Section 49(1)(iii) of the Income Tax Act.
3. **Capital Gains Calculation**:
- Capital Gains = Sale Proceeds - Cost of Acquisition
- Since the cost of acquisition is Nil, the entire sale proceeds will be considered as capital gains.
4. **Tax Rate**:
- If the gold was held for more than 3 years (making it a long-term capital asset), the capital gains will be taxed at 20% with indexation benefit (if applicable).
5. **Filing Requirements**:
- You should report the capital gains in your Income Tax Return (ITR) for the relevant assessment year (AY) in which the sale took place (AY 2010-11 based on your example).
### Wealth Tax Return and Penalty Considerations:
1. **Wealth Tax Return**:
- Filing a wealth tax return does not fulfill the requirement for reporting capital gains. Capital gains from the sale of assets (like gold) need to be reported in the Income Tax Return (ITR).
2. **Assessment by AO**:
- If the Assessing Officer (AO) finds that you sold gold and did not report the capital gains in your ITR, they may initiate proceedings to assess the undisclosed income.
- The AO has the authority to add the entire sale proceeds as income and tax it accordingly.
3. **Penalty Under Section 271(1)(c)**:
- Section 271(1)(c) deals with penalties for concealment of income or furnishing inaccurate particulars of income.
- If the AO finds that there was deliberate concealment or inaccurate reporting of income (including capital gains), they may initiate penalty proceedings under this section.
### Recommendations:
- **Documentation**: Even though you received the gold as a gift, it's advisable to maintain documentation and evidence of the gift received, such as a gift deed or any other proof of transfer.
- **Tax Compliance**: Ensure that you accurately report all capital gains from the sale of gold in your Income Tax Return (ITR) for the relevant assessment year.
- **Consultation**: Given the specific circumstances and potential tax implications, consider consulting with a tax advisor or chartered accountant who can provide personalized advice and assist in compliance with tax regulations.
In summary, while there may be no cost of acquisition for the gold received as a gift, you are still required to report the capital gains from its sale in your Income Tax Return. Failure to do so may lead to penalties and additional tax liabilities as determined by the Assessing Officer.
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