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capital gain of sale of jewellery

vinod (account assistant) (72 Points)

27 July 2010

Dear Experts

I want to ask whether sale of jewellary purchased in 1980 and sold in 2009-10 be treated as Long Term Capital Gain? How shud I calculate the Tax if any thereon.

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6 Replies

CA Krishna Chaitanya M (Chartered Accountant) (463 Points)
Replied 27 July 2010

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,

hence, if there is transfer of capital asset it will subject to capital gain

morover, this is long term capital gain because it is held by assesse more than 36 months,

CG computed as follows

sale consideration - expenses on transfer=net cosideration

net consideration-indexed cost of aquisition=long term capital again before claiming relevent exemptions u/s 54

here indexed cost of aquisition = cost of aquisition*cost inflation index in the year of sale / cost inflation index in the year of aquisition

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Mayank kharbanda (Risk Advisory Services) (409 Points)
Replied 27 July 2010

yes it will be liable to tax on capital gain since jewellry is covered under the definition of capital asset u/s 2(14)....

it will be a long term capital gain and therefore benefit of indexation will be given.....

P.S. tax on such transaction can be saved by creating a HUF...

vinod (account assistant) (72 Points)
Replied 27 July 2010

will your answer differ if the assesse is a woman who has got the jewellary in 1980, at the time of her marriage and cant it be treated as her personal belonging, isnt it exampt under Income Tax Act?

Dharmendra Jha (Asst. Manager Finance) (100 Points)
Replied 02 August 2010

No it doesn't matter assessee is male or female.

caclub india (NA) (38 Points)
Replied 01 October 2010

Originally posted by : Mayank kharbanda
	yes it will be liable to tax on capital gain since jewellry is covered under the definition of capital asset u/s 2(14).... it will be a long term capital gain and therefore benefit of indexation will be given..... P.S. tax on such transaction can be saved by creating a HUF...