Taxation on jewellery sales: The profit earned from the sale of jewellery is added to your income, after which you have to pay income tax according to the tax slab in which your annual income falls.
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 jewellery? 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 jewellery today.
Capital gain tax on profit from the sale of capital asset
As told to you that jewellery is seen as a capital asset, therefore the profit from the sale of capital asset is taxed as capital gain. The capital gain you get can be taxed on the basis of the holding period. This means that the profit made on selling jewellery 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 jewellery is sold after 24 months of purchase, then the profit made on the sale is considered as long term capital gain. If you sell the jewellery before this, then the profit made from it is taxed as per short term capital gain. Such short term capital gain is considered as your regular income and is taxed as per the slab rate applicable to you.
If you sold the jewellery before 23 July 2024, then Long Term Capital Gain (LTCG) will be taxed at a flat rate of 20% after indexation. Long Term Capital Gain without indexation will be taxed at a flat rate of 12.50%.
The profit from the sale of jewellery is added to your income, after which you have to pay income tax according to the tax slab in 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 everyone is Rs 3 lakh.
Ways to avoid paying LTCG tax on jewellery
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 profits earned from jewellery. For this, you will also have to fulfill some other conditions.4
