Sold Gold jewellery what's tax liability

Dear Singh:

The Income Tax Act says "Capital Asset :Capital asset means property of any kind except the following :

1. Stock-in-trade, consumable stores or raw-materials held for the purpose of business or profession.
2. Personal effects like wearing apparel, furniture, motor vehicles etc., held for personal use of the tax payer or any member of his family. However, jewellery, even if it is for personal use, is a capital asset.

Hence the sale attracts Capital Gains @ 20% if it is a LTCG and @30% if it is STCG, please clarify whether your wife has any other source of income, since the same will be clubbed while computing her tax liability.

Further , you have stated that it was disposed 2 years back, it should had been declared in that relevant year, in case of any tax liability she wil be charged interest on the tax due @1.1% PM from the day the tax becomes due to the date its actual payment is made.

Sorry, but let me make clear statement.

Got jewellery in Dec 2006 during marriage from parents. Sold in May 2008 for part payment of Flat.

Now my question is:

1. Sold in my name, so won't it be my tax liability?

2. Since all sale amount was used to pay flat EMI, can't we get exemption under section 54F?

3. What if it was gifted by parents bought by them a long time ago i.e more than 10 years ago. Can't we still get exemption? 

Dear Singh

1. Sold in my name, so won't it be my tax liability?

Ans. Though you sold it it belongs to your wife. Hence, the liability arises to her unless proved contrary.

2. Since all sale amount was used to pay flat EMI, can't we get exemption under section 54F?

Ans. Did the amount invested in the relevant year for the flat in which the gold jewellery was sold? If answer is affirmative then you can claim exemption. However if it not so then the sub section 4 of 54 F comes into operation which reads as follows:

Yes, the jewellery was sold in May 2008 and paid flat part payment in May 2008 also, so used all sale amount.

Since jewellery was gifted to us during marriage in Dec 2006. Can we still get exemption under section 54F?  

Dear Singh

54F exemption is for long term capital gains and not short term(since the period of holding is less that 3 years), you cannot claim benefit of 54F

Not even if it was purchased by parents a long time ago like I said before 10 years ago, but was gifted during marriage in Dec 2006???

No the fact remains that the property in it was transferred to you only in 2006, hence there can be no claim