Income Tax: There will be no tax on selling gold jewellery, know the right way to save tax..
Like shares and bonds, the government also collects capital gains tax on the sale of gold depending on the holding period. But, if certain conditions are followed under Section 54F of Income Tax, investors can avoid paying capital gains tax. Under Section 54F, the complete exemption is given not only on the sale of gold but also on capital gains tax arising from the sale of shares, bonds, mutual funds, or property. This benefit is given only to individual taxpayers or Hindu Undivided Family (HUF). If you have also sold gold and used the profit to buy or build a house, then you will not have to pay even a single penny as capital gains tax.
To save tax on profit made on the sale of gold, you will have to fulfill certain conditions. First, the condition is that you have to buy the house within two years of selling the gold. If you have purchased a house even one year before the sale of gold, you are entitled to tax exemption. Yes, tax exemption will also be available if you invest in under-construction property within three years of the sale of gold.
Exemption on residential property only
According to a report by Live Mint, Chirag Chauhan of Chauhan & Company says, “Taxpayers should keep in mind that exemption from capital gains tax on the sale of gold is available only on residential property and not on commercial property. Moreover, it should be purchased one year before or two years after the sale of assets on which capital gains are earned.”
Thetavega Capital Founder CA Paras Gangwal says, “If taxpayers own more than one residential property then they cannot claim this exemption. The maximum limit for claiming exemption is ₹10 crore, which was introduced in Budget 2023, before which there was no such limit.”
What is capital gains tax?
The government also collects tax on the income earned from various types of investments. This tax is called capital gains tax. There are two types of capital gains tax, short-term and long-term. The tax rates on these also vary. Suppose you had invested Rs 1 lakh in some property or gold a few years ago. Which has now increased to Rs 2 lakh, so Rs 1 lakh will be considered as capital gain i.e. profit. Tax will be taken from you only on this.
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