Working of tax on ltcg on inherited jwellery
This query is : Resolved
29 March 2020
query-please reply--where price is unknown for inherited gold purchased before 1971, (mother received from her mother, mother-in-law and husband), we receive after mother passes away in 2019 and sell in say 2019, is the following working for tax amount on LTCG on inherited gold correct? Am ready to pay some amount for professional advice reg. the foll. queries-- 1) working-let us say an eg to tell if d working is correct--FMV as on 1st april 2001=4300 INR so let us say for 100gms working-- fmv 100gmsx4300 = 430000 -sale value-100gmsx3000 = 300000 = 130000x20% = 26000 +4% health&edu cess on 26000= 1040 tax payable =27040
pls replyALso, if i select category 300 (self assessment) in challan 280 for individual, then the assessment yr 2020-21 is not getting accepted, it says assessment yr ca not be greater than the financial yr. which category for a homemaker then must i select for payment of tax on inherited gold. can i consult you via email or phone by paying u a fee sir?
pls replyALso, if i select category 300 (self assessment) in challan 280 for individual, then the assessment yr 2020-21 is not getting accepted, it says assessment yr ca not be greater than the financial yr. which category for a homemaker then must i select for payment of tax on inherited gold. can i consult you via email or phone by paying u a fee sir?
29 March 2020
Jwellery is not a capital asset as per section 2(14) of the income tax act 1961. Hence it is not liable for capital gains.
Moreover gift received via inheritance is liable for any tax under Income tax Act 1961.
You may contact me on caparth@parthdshah.com for inquiry.
Moreover gift received via inheritance is liable for any tax under Income tax Act 1961.
You may contact me on caparth@parthdshah.com for inquiry.
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29 March 2020
Capital asset includes property of any kind including jewellery , excludes rural agricultural land,gold bonds issued into by govt of india, special bearer bonds ,personal effect of movable property excluding jewellery, stock in trade.
29 March 2020
IT DEPT DEFINITION says sale of jewellery IS a capital gain
Meaning of Capital Gains
Profits or gains arising from transfer of a capital asset are called “Capital Gains” and are
charged to tax under the head “Capital Gains”.
Meaning of Capital Asset
Capital asset is defined to include:
(a) Any kind of property held by an assessee, whether or not connected with business or
profession of the assesse.
(b) Any securities held by a FII which has invested in such securities in accordance with
the regulations made under the SEBI Act, 1992.
However, the following items are excluded from the definition of “capital asset”:
(i) any stock-in-trade (other than securities referred to in (b) above), consumable
stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is, movable property (including wearing apparel and
furniture) held for personal use by the taxpayer or any member of his family
dependent on him, but excludes—
(a) jewellery;
(b) archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures; or
(f) any work of art.
“Jewellery" includes—
a. ornaments made of gold, silver, platinum or any other precious metal or any alloy
containing one or more of such precious metals, whether or not containing any
precious or semi-precious stones, and whether or not worked or sewn into any
wearing apparel;
b. precious or semi-precious stones, whether or not set in any furniture, utensil or
other article or worked or sewn into any wearing apparel;
Meaning of Capital Gains
Profits or gains arising from transfer of a capital asset are called “Capital Gains” and are
charged to tax under the head “Capital Gains”.
Meaning of Capital Asset
Capital asset is defined to include:
(a) Any kind of property held by an assessee, whether or not connected with business or
profession of the assesse.
(b) Any securities held by a FII which has invested in such securities in accordance with
the regulations made under the SEBI Act, 1992.
However, the following items are excluded from the definition of “capital asset”:
(i) any stock-in-trade (other than securities referred to in (b) above), consumable
stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is, movable property (including wearing apparel and
furniture) held for personal use by the taxpayer or any member of his family
dependent on him, but excludes—
(a) jewellery;
(b) archaeological collections;
(c) drawings;
(d) paintings;
(e) sculptures; or
(f) any work of art.
“Jewellery" includes—
a. ornaments made of gold, silver, platinum or any other precious metal or any alloy
containing one or more of such precious metals, whether or not containing any
precious or semi-precious stones, and whether or not worked or sewn into any
wearing apparel;
b. precious or semi-precious stones, whether or not set in any furniture, utensil or
other article or worked or sewn into any wearing apparel;
29 March 2020
some expert request to guide me if the working is correct. i need to pay the tax.
30 March 2020
Since jwellery is received in inheritance, such transfer is not taxable
30 March 2020
Cost of Acquisition will be FMV as on 1-4-2001. (You will have to take valuation certificate)
Sale Value: As per Sale Invoice
Indexation Year - 1-4-2001 ie FY 2001-2002
Challan category is to be selected as 300 -self assessment tax. But you need will have to pay tax after 31st March 2020. If you want to pay tax before that, you need to select Advance Tax instead of self assessment tax.
Sale Value: As per Sale Invoice
Indexation Year - 1-4-2001 ie FY 2001-2002
Challan category is to be selected as 300 -self assessment tax. But you need will have to pay tax after 31st March 2020. If you want to pay tax before that, you need to select Advance Tax instead of self assessment tax.
30 March 2020
@ Anita.
1. In your working while calculating the cost of acquisition. You can take the benefit of indexation . 100 for the year of purchase i.e, 2001-02 and 289 for FY 2019-20.
3. Tax rate applicable: 10% on the capital gain without indexation & 20% with indexation benefit. Us ethe method whichever gets you less tax
2. As per your calculation you purchased at 4300 per gram and selling at 3000 per gram. Hence there will be loss. No Capital Gain tax to be paid.
3. In case there is profit in actual figures, then you should pay the tax under the category of self assessment(300) because advance tax dates have already passed.
Please pay the tax after 31.03.2020. then the system will accept the payment.
1. In your working while calculating the cost of acquisition. You can take the benefit of indexation . 100 for the year of purchase i.e, 2001-02 and 289 for FY 2019-20.
3. Tax rate applicable: 10% on the capital gain without indexation & 20% with indexation benefit. Us ethe method whichever gets you less tax
2. As per your calculation you purchased at 4300 per gram and selling at 3000 per gram. Hence there will be loss. No Capital Gain tax to be paid.
3. In case there is profit in actual figures, then you should pay the tax under the category of self assessment(300) because advance tax dates have already passed.
Please pay the tax after 31.03.2020. then the system will accept the payment.
01 April 2020
so taking the eg of 100 gms further, sir, 430/999x875 (PURITY as ours was 21karat)x100gms=37661,
indexed price is 37661x289/100=108843.
SP 3000x100=300000-108843= taxable amt
without indexation is giving lesser tax.thanks,
one last question sir, since capital gains upto 1lakh in a yr is non taxable, is this to be exempted from the gains earned and rest is to be taxed (eg 300000 earned - 100000=200000-fmv=taxable income) or because earning is above 1lakh so entire amt ie 3lakhs -fmv 37661=262339 fully taxable?
indexed price is 37661x289/100=108843.
SP 3000x100=300000-108843= taxable amt
without indexation is giving lesser tax.thanks,
one last question sir, since capital gains upto 1lakh in a yr is non taxable, is this to be exempted from the gains earned and rest is to be taxed (eg 300000 earned - 100000=200000-fmv=taxable income) or because earning is above 1lakh so entire amt ie 3lakhs -fmv 37661=262339 fully taxable?
01 April 2020
profit in actual in the sense it is inherited so we hv not incurred any cost to purchase but we have earned on selling it after inheritance so we wl be liable to pay....even if it shows loss in calculation...am i right, sir?
01 April 2020
@ Anita:
Long Term Capital Gain from sale of shares and mutual fund upto the extent of Rs. 1 Lakhs is exempt.
In your case, the gain is earned from sale of jewellery, hence no exemption. Entire gain will be taxable.
Long Term Capital Gain from sale of shares and mutual fund upto the extent of Rs. 1 Lakhs is exempt.
In your case, the gain is earned from sale of jewellery, hence no exemption. Entire gain will be taxable.
01 April 2020
If in your capital gain taxation there is loss on sale of jewellery then there will be no tax payable on it. You will be able to carry forward the loss for future years set off.
01 April 2020
Although the jewellery is received in hesitance, cost to the original owner has to be considered in this case. Since the jwellery was purchased before 2001, we have to take the cost of jwellery as on 1-4-2001 in yu case
03 April 2020
FMV is 430 per gm for 1 gm for 24 karat. rs 4300 is for 10 gms not 1 gm.
sp is 3000 per gm for 21 karat. 3000-430. it is profit. not loss.
sp is 3000 per gm for 21 karat. 3000-430. it is profit. not loss.
03 April 2020
so if i am correct, do i now go ahead and pay 10% tax on the basis of FMV (and not indexed price)?
03 April 2020
How do you calculate sales tax on gold?
Spurto consultancy services, what i find on internet is this--Shubham Agrawal, Senior Taxation Advisor, TaxFile.in says, "The calculation of LTCG can be done by subtracting the original purchase price or fair market value of gold on 1 April 2001, whichever is higher, from the selling price. The resultant capital gain will be taxed at 20.6%.Nov 25, 2019
if u r sure, as you are dealing in these matters on a daily basis, about 10% rate of tax on ltcg of gold on FMV< i will go ahead and pay 10% tax on SP.
Spurto consultancy services, what i find on internet is this--Shubham Agrawal, Senior Taxation Advisor, TaxFile.in says, "The calculation of LTCG can be done by subtracting the original purchase price or fair market value of gold on 1 April 2001, whichever is higher, from the selling price. The resultant capital gain will be taxed at 20.6%.Nov 25, 2019
if u r sure, as you are dealing in these matters on a daily basis, about 10% rate of tax on ltcg of gold on FMV< i will go ahead and pay 10% tax on SP.
03 April 2020
is it compulsory to file itr if an individual has no other taxable income and only earned capital gains (householder)
03 April 2020
spurto consultancy, yr mentioning 10% on fmv. i got on google search on economic times the foll stating 10% flat on fmv is on equity shares only
It is important to compute the long-term capital gains/long-term capital losses (LTCL) on the assets which have been or are planned to be sold in FY 2019-20. The tax payable on such indexed LTCG is 20 per cent plus cess at 4 per cent.
There are two things that individuals need to keep in mind regarding the cost inflation index.
Firstly, this number will be used to calculate inflation-adjusted cost only for those assets where inflation-adjusted (indexation benefit) is allowed ..
Read more at:
https://economictimes.indiatimes.com/wealth/tax/finance-ministry-notifies-cii-for-the-fy-2019-20-as-289/articleshow/71107063.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
It is important to compute the long-term capital gains/long-term capital losses (LTCL) on the assets which have been or are planned to be sold in FY 2019-20. The tax payable on such indexed LTCG is 20 per cent plus cess at 4 per cent.
There are two things that individuals need to keep in mind regarding the cost inflation index.
Firstly, this number will be used to calculate inflation-adjusted cost only for those assets where inflation-adjusted (indexation benefit) is allowed ..
Read more at:
https://economictimes.indiatimes.com/wealth/tax/finance-ministry-notifies-cii-for-the-fy-2019-20-as-289/articleshow/71107063.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
03 April 2020
Your Capital Gain calculation:
Sale Consideration 3,00,000.00
Indexed Cost of Acquisition 1,24,270.00
(4300*10)*289/100
Long Term Capital Gain 1,75,730.00
Tax Payable Nil (because total income below Rs. 2,50,000)
Since your total income do not increase the basic exemption limit of Rs. 2,50,000 it is not mandatory for you to file your income tax return.
Sale Consideration 3,00,000.00
Indexed Cost of Acquisition 1,24,270.00
(4300*10)*289/100
Long Term Capital Gain 1,75,730.00
Tax Payable Nil (because total income below Rs. 2,50,000)
Since your total income do not increase the basic exemption limit of Rs. 2,50,000 it is not mandatory for you to file your income tax return.
03 April 2020
4300 per 10 gm 24 karat as i mentioned earlier.
so 4300/10=430
so 4300/10=430
03 April 2020
fmv is 430*100=43000 if indexed price to b taken as per you, then 43000*875/999=37663
indexed price:-37663*289/100=108846
SP-100gmsx3000=300000-108846=191154.
20% of 191154=38230+ 4%cess 1529=39759
or simply, SP-fmv (no indexation) - 300000-37663=262337
20% of 262337=52467+4%cess=2099
plus 4 days late payment as per 9%-9% of 39759=rs39
ok sir, from what i understand, from your methods and explanation, plus internet searches, this is the final calculation and i can see that as per yr guidance, indexed price of fmv is more beneficial. pls guide on this final calcualation
indexed price:-37663*289/100=108846
SP-100gmsx3000=300000-108846=191154.
20% of 191154=38230+ 4%cess 1529=39759
or simply, SP-fmv (no indexation) - 300000-37663=262337
20% of 262337=52467+4%cess=2099
plus 4 days late payment as per 9%-9% of 39759=rs39
ok sir, from what i understand, from your methods and explanation, plus internet searches, this is the final calculation and i can see that as per yr guidance, indexed price of fmv is more beneficial. pls guide on this final calcualation
04 April 2020
In the earlier calculation, took 24 carat as purity
Your indexed calculation is correct, you can proceed with the same:
Sale Consideration Rs. 300000
Indexed cost of acquisition Rs. 108845
(4300*10)*875/999*289/100
Long Term Capital Gain Rs 191155
Tax on LTCG including Cess Rs. 39,760
As mentioned above, you do not have any other source of income except the Capital Gain. Your total income do not increase the basic exemption limit of Rs. 2,50,000 allowed to individuals. Hence it is not mandatory for you to file Income Tax Return.
Your indexed calculation is correct, you can proceed with the same:
Sale Consideration Rs. 300000
Indexed cost of acquisition Rs. 108845
(4300*10)*875/999*289/100
Long Term Capital Gain Rs 191155
Tax on LTCG including Cess Rs. 39,760
As mentioned above, you do not have any other source of income except the Capital Gain. Your total income do not increase the basic exemption limit of Rs. 2,50,000 allowed to individuals. Hence it is not mandatory for you to file Income Tax Return.
05 April 2020
4300/10. not 4300x10. anyways, thanks for so much guidance, sirs. i have taken d tips from yr messages here plus internet searches. thank you so much for all the guidance - about indexed price and itr - am greatly thankful. Spurto and mr. parth. thank you.
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