Income Tax Rules: Are you thinking of selling gold, diamond, or silver jewelry? First, know the income tax rules...

Income Tax Rules For Jewellery: Jewellery is seen as a property and the profit made on selling it is taxed. In such a situation, many types of questions come to the mind of the people regarding tax. Like, does a person whose income is less than the basic exemption limit also have to pay tax on the long-term capital gain from the sale of jewelry? And if the answer is yes, then how much tax has to be paid on such capital gain? You must also have many such questions in your mind. Let us tell you in detail about the tax levied on the sale of jewelry today.

Capital gain tax on profit from the sale of capital asset

As told to you jewelry is seen as a capital asset, therefore the profit from the sale of a capital asset is taxed as capital gain. The capital gain you get can be taxed based on the holding period. This means that the profit made on selling jewelry is taxed as long-term or short-term capital gain depending on the holding period.

When will short-term and long-term capital gain tax be levied?

If the jewelry is sold after 24 months of purchase, then the profit made on the sale is considered a long-term capital gain. Earlier, if you sell jewelry, then the profit made from it is taxed as per short-term capital gain. Such short-term capital gain is considered your regular income and is taxed as per the slab rate applicable to you.

If you sold the jewelry before 23 July 2024, then long-term capital gain (LTCG) will be taxed at a flat rate of 20% after indexation. Without indexation, long-term capital gain will be taxed at a flat rate of 12.50%.

The profit from the sale of jewelry is added to your income, after which you have to pay income tax according to the slab on which your annual income falls.

Basic Exemption Limit

The basic exemption limit for general category taxpayers is Rs 2.50 lakh. However, for those who have turned 60, their basic exemption limit is three lakhs. At the same time, people above 80 years of age do not have to pay any tax on income up to Rs 5 lakh. If you choose the new tax regime, the basic exemption limit for all is Rs 3 lakh.

How to avoid paying LTCG tax on jewelry

If you use this money to purchase or construct a residential property in India within a specified period, then you can avoid paying long term capital gain tax on the profit from jewellery. For this you will have to fulfill some other conditions also.

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