Income tax calculator: Selling gold (either physical or digital or paper) after holding it for more than three years, it attracts 20 per cent Long Term Capital Gain (LTCG) tax. However, under certain conditions, one can avoid paying this tax even after holding the precious bullion asset for more than three years. Under Section 54F of the Income Tax Act, one can claim income tax exemption on net wealth gained from rom the sale of capital assets such as stocks, bonds, gold etc., other than a house property. However, the claim can be possible if the whole money received from the gold sale is used for buying of residential property.
Explaining the income tax rule on gold selling, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “The Income Tax rule says that one will have to pay LTCG tax of 20 per cent with indexation if the seller has hold its gold for more than 3 years. However, if the entire amount received from gold sale is used for buying a new residential property or for construction of a residential property, then the gold seller can claim income tax exemption on long term capital gain on one’s gold sell.”
However, Pankaj Mathpal maintained that for claiming income tax exemption on gold sell, one has to buy a new residential property within 2 years of gold sell and in the case of construction of new residential property, the given time is 3 years.
Echoing with Pankaj Mathpal’s views, Archit Gupta, Founder & CEO at Clear said, “If you cannot use the entire sale proceeds to buy/construct a new residential house property before the ITR filing due date, you must deposit the sales proceeds from gold assets in a Public Sector Bank’s Capital Gains Account. You can use these funds to buy/construct a new residential house property within the requisite timelines.”
Archit Gupta of Clear listed out the below-mentioned three conditions where income tax exemption under Section 54F becomes applicable:
1] You must buy a new residential property one year before the sale of the capital asset; or
2] You must purchase residential property within two years from the sale date of the capital asset; or
3] You must build/construct a residential property within three years from the sale date of the capital asset.
Source: https://www.livemint.com/money/personal-finance/income-tax-calculator-how-gold-sellers-can-save-ltcg-tax-on-wealth-gain-11651891807194.html
Income tax calculator: One can claim tax exemption under Section 54F, if it has bought a new residential property one year before the sale of the capital asset