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Income tax on capital gains from sale of personal jewellery

K.G.Krishnamurthy (Engineer) (24 Points)

10 April 2014

I bought Gold jewellery for personal use in june 2010 @ Rs 1,61,000 and sold it for Rs 3,07,000 in April 2014. Can you please advise me about the tax liability for the capital gains arising out of this sale and also advise me whether I will be eligible for Indexation benefits and also long term capital gains tax @ 20.6%

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10 Replies

JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 10 April 2014

FVC : 307000

LESS :

INDEXED COA: 161000*939/632 = 239207

LTCG : 67793

TAX @ 20.6% - 13965

PLEASE NOTE THAT IT IS ASSUMED THAT YOU HAVE INCOME UNDER HEADS ALSO AND YOUR TOTAL INCOME EXCEEDS THE EXEMPTION LIMIT SPECIFIED FOR THE YEAR.

IN CASE THIS IS NOT SO YOUR TAX LIABILITY WILL CHANGE TO NIL.

REGARDS,

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CA Radhika Pai (Chartered Accountant) (776 Points)
Replied 10 April 2014

But capital gain will not arise as jewellery used for personal purpose is not regarded as Jewellery'Capital Asset'...

CA Radhika Pai (Chartered Accountant) (776 Points)
Replied 10 April 2014

But capital gain will not arise as jewellery used for personal purpose is not regarded as 'Capital Asset'...

Sharath (student) (52 Points)
Replied 10 April 2014

I support Radhika pai suggestion Bcz it is not covered under the defination of capital asset

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2015 Points)
Replied 10 April 2014

No Radhika

jewellery is a capital assets u/s 2 (14) of income tax act 1956

section 2 (14) says that any assets whether movabla or immovable is a capital assets but subject to certain exclusions as given below; (given in short)

1. personal effects like wearing appearls, furniture, utensils, motor /car but it does not jewellery, precisous stones, semi precisous stones whether sweing in wearing appearls or not.

hence long term capital gain arise on sale of jewellery is taxable in the hands of seller.

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Rahul jain (LEARNING & TEACHING) (435 Points)
Replied 10 April 2014

yes jewellery is clearly include in capital asset whthr it is for personal use or not....if any one does the business of jewellary than it will be its business income but if he is not doing so than in which head u will make it income??? so it is logically clear that jewellary will be taxable under capital gain head.....

and as per above question the calculation made by Mr. jainendra is accurate.....