Income Tax Exemption: If you are selling gold or jewelery to buy a house, then you can get exemption from income tax. In other situations you will have to pay tax…
Buying a home is one of the biggest financial decisions of everyone’s life. For this, people prepare for years and save money bit by bit. While buying a house, many people also raise money by selling the gold, jewelery etc. they already have. If you are also making such a plan, then before doing that you should definitely know about some income tax rules.
Tax has to be paid on selling jewelry
Currently, gold prices are hovering around record high levels. In such a situation also, people may think of removing jewelery in their efforts to raise finance to buy a house. Before doing that, you should know that whether you have bought the jewelery yourself or got it as an inheritance or a gift, whenever you go to sell it, you will be liable to pay tax.
This is how tax liability is incurred
If you are selling the jewelery within 3 years from the date of its purchase, then in such a situation you are liable to pay short term capital gains tax. Whereas if the holding period is more than 3 years, then long term capital gains tax is payable. This means that tax will have to be paid in every situation and there will be liability for capital gains tax, whether it is short term or long term.
How to get exemption from long term capital gains tax
Under the Indian Income Tax Act, taxpayers are exempted from long term capital gains tax in certain special cases. This exemption is available under Section 54F of the Income Tax Act 1961. Under this, if you are making long term capital gain on selling a property, but you are using that money to buy a residential property i.e. a house, then you can claim exemption from liability of long term capital gain tax.
Exemption will be available only in these cases
However, this benefit is available only if you are fulfilling some important conditions. You can avail this discount on jewelery sold up to one year after purchasing the house. There is also a rebate on using jewelery to buy a house within two years of selling it. If you are building a house, then after selling the jewellery, you get up to 3 years to get the exemption. Earlier there was no limit on this exemption, but now a maximum limit of Rs 10 crore has been fixed for it.
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