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Need experts advise

sunny (Software engineer) (24 Points)

22 November 2012

HI Experts,

i need an advise from the experts in this forum. Although i googled lot about this question but still wants to confirm.

I am 27 years old , working in an IT firm. when i was 10 years old my grandmother gifter me an GOLD ornament which i want to sell now due to financial emergency.

i want to know what will be tax implications on this.

what i learned from googling abt this topic is that, the profit so earner would come under Long Term Capital Gain which will be taxed at 20%.

Honestly, for me 20% is too much. Is there any workaround (ofcourse under legal methods) by which i can save some of this tax, then please HELP ME.

thanks in advance

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3 Replies

CA Ruben Balooni (Professionalism ™) (1324 Points)
Replied 22 November 2012

Consequences of Sale :-

Transaction Taxable : Yes

Type Of Capital Gain : Long Term

Cost Of Acquisiton : The price paid by your grandmother [By virtue of Section 49(1)]

Rate Of Tax : 20% after indexation

Ways to save tax : Well you can save tax only by re-investing and then you can claim exemption u/s 54EC & 54F. In 54EC you need to re-invest the amount of capital gain in bonds issued by NHAI or RECL (maximum Rs. 50 Lakh in 1 Financial year) with 6 months from the date of transer. In 54F you need to re-invest the net consideration in a New Residential House Property (provided you do not own more than 1 house as on date of transfer), amount of exemption in this case shall be

Capital Gain x (Amount Re-invested/Net Consideration) [subject to maximum of capital gain]

- Ruben Balooni

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CA Bhargav Nathwani (CA in Practice) (8307 Points)
Replied 23 November 2012

Originally posted by : Ruben Balooni
	Consequences of Sale :- Transaction Taxable : Yes Type Of Capital Gain : Long Term Cost Of Acquisiton : The price paid by your grandmother [By virtue of Section 49(1)] Rate Of Tax : 20% after indexation Ways to save tax : Well you can save tax only by re-investing and then you can claim exemption u/s 54EC & 54F. In 54EC you need to re-invest the amount of capital gain in bonds issued by NHAI or RECL (maximum Rs. 50 Lakh in 1 Financial year) with 6 months from the date of transer. In 54F you need to re-invest the net consideration in a New Residential House Property (provided you do not own more than 1 house as on date of transfer), amount of exemption in this case shall be Capital Gain x (Amount Re-invested/Net Consideration) [subject to maximum of capital gain] - Ruben Balooni

Agree with Ruben.

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GiriRaaj (Articleship Traing ) (162 Points)
Replied 29 November 2012

Hello Mr. Sunny, best of my knowledge you have 2 options which are mentioned below

OPTION 1 SECTION 54EC

i assume that your capital gain will not be more than 50 lakhs ,

Now u have one option to sell that gold and invest your money in bonds of NHAI and RECL , withing 6 mths of sale u have to do investment in that bonds, and you would not be able to take that mooney back from that bonds till next 3 years,,

in this way you can successfully save your full tax of 20 %

OPTION 2 SECTION 54F

i am assuming that you are owner of only 1 house,

now you can use the amount of capital gain to buy RESIDENTIAL HOUSE PROPERTY

you have to purchase house within 1 year of sale of your gold :)

thanks :)