Know about Tax on Sale of Gold or Jewelry including inherited Gold/Jewelry
Updated: Aug 6, 2020
In India, investment in gold and jewelry is a very common type of investment. And it's very common in India to sell and purchase gold and other jewelry on various occasions such as during festivals or family events like a wedding or birthday.
But even though this is the most common form of investment, yet many people are unaware of or ignoring taxability on the sale of Gold and other jewelry. Today, in this article we have tried to throw some light on Income Tax provisions that relate to the taxability on Gold and other Jewelry.
Now, before we begin we need to understand that Gold and other Jewelry are being considered as Capital Asset.
As per Section 2(14) "capital asset" means—
(a) property of any kind held by an assessee, whether or not connected with his business or profession;
(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992),but does not include
(i) any stock-in-trade [other than the securities referred to in sub-clause (b)], consumable stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes—
jewellery; archaeological collections; drawings; paintings; sculptures; or any work of art.
Here, the jewelry includes:
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil, or other article or worked or sewn into any wearing apparel.
So from the above definition as per Income Tax Act, it is very clear that Jewelry is considered as a capital asset and profit on the sale of a capital asset is called a capital gain.