Income Tax: Selling jewellery to buy a house? You can claim exemption on capital gains

Income Tax (I-T) Act 1961 allows taxpayers to claim tax exemption of LTCG nether conception 54F.  Under this provision, if you person earned gains by selling an asset, you tin assertion exemption connected taxation by buying a residential property.

Provisions which taxpayers indispensable beryllium alert of

1. The spot indispensable beryllium bought either 1 twelvemonth earlier oregon 2 years aft the merchantability of the acquisition of jewellery.

2. The spot indispensable beryllium constructed wrong 3 years of merchantability of the aged asset. 

“Taxpayers indispensable beryllium mindful of the information that they lone acquisition a residential spot and not  conscionable immoderate property. And moreover, it indispensable beryllium bought 1 twelvemonth earlier oregon 2 years aft the merchantability of assets connected which superior summation accrues," said CA Chirag Chauhan from Mumbai-based Chauhan & Co.

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“Section 54F of the Income Tax Act allows individuals to assertion an exemption connected semipermanent superior gains earned from selling semipermanent superior assets specified arsenic jewellery, shares, and different superior assets but for location spot if the merchantability proceeds are reinvested for the intent of purchasing oregon constructing a location with immoderate conditions," said CA Paras Gangwal, Founder of ThetaVega Capital.

“Taxpayers can’t assertion this exemption if they person much than 1 residential property. The maximum headdress of claiming exemption is ₹10 crore, which was introduced successful Budget 2023, anterior to which — determination was nary specified limit," helium added.

Let america summarise the points mentioned above:

1.  If you person sold jewellery aft holding for 3 years, you are entitled to wage superior gains taxation astatine the complaint of 20 percent.

2. The income taxation tin beryllium exempted if the payer buys a residential spot with the proceeds of jewellery.

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3. It is captious that the spot is bought either 1 twelvemonth earlier oregon 2 years aft the merchantability of jewellery. 

4. Taxpayers can’t assertion this exemption if they already person 2 oregon much residential properties successful their name. 

5. Maximum bounds of claiming income taxation exemption nether conception 54F is ₹10 crore. 

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Published: 28 Apr 2024, 09:16 AM IST