- Transfer includes exchange. In your case, sale consideration would be value of new jewellery obtained in exchange of old jewellery. Cost of acquisition would be higher of actual cost incurred or market value as on 01.04.2001. Do the calculations as suggested in both the scenario to find out actual capital gain or loss.
Capital gain tax on jewellery
I am having ancestral jewellery and it is quite old.. i went to a jeweller and he told me that he can make new jewellery from the ancestral jewellery by melting and recasting it.. so if i want to change my jewellery to new designs.. do i am liable for capital gain tax? But iam not selling the jewellery.. he is just melting and making new and also charging the making charges.. do how could i do this to avoid capital gain tax? 2- in second scenario he just asked me toh excange the ancestral jewellery to the new gold jewellery that he is having of the same weight and pay for extra gold Weight the weight new jewellery exceds the ancestral and making charges- In both the scenario iam not making the sale .. so do i am liable for capital gain tax Plz suggest me the way in which my old jewellery converts in to new ones and i don’t cover in capital gain tax
Asked 5 years ago in Capital Gains Tax
But in first case iam not exchanging my gold jewellery.. iam just giving to the jewellery to melt and recast it into new design... and only paying making charges.. so how do i laible for capital gain tax..? Its not a exchange.. And also sugggest me the other way toh avoid capital gain and convert my old jewellery to new ones
Asked 5 years ago
Hi
In the first scenario, there would be no tax liability as there's no transfer of capital asset.
However, in the second case, it's and exchange and exchange amounts to transfer of capital asset. Hence, you shall be chargeable to capital gain tax in this case.
Dear Sir,
There would be no capital tax liability if you are just giving it to melt and recast it into new design.
Capital gains arises when there is transfer of a capital asset. In your case, you are not transferring your old gold to anyone. You are only converting it into different ornament by paying additional money, if required. Hence, there is no capital gains on the return value of the gold.
However, when you get back money on purchase of new jewellery, as the cost of new jewellery is less than the gold you are exchanging, there is transfer of capital asset and hence,there will be capital gains. However, this does not seem to be applicable in your case, as the cost of new jewellery may be more than the amount of the gold you are exchanging.
Hello,
1. The first case of melting and recasting is not transfer as per income tax and won't be liable for capital gains tax.
2. In the second case, there is an exchange of jewelry, which will be iable for capital gains tax.
I hope that this answer satisfies your requirement.
Regards,
CA Hunny Badlani
The first case of melt and recast is no transfer.
In first case no capital gain as no exchange/ transfer.
In second case since you are exchanging goods which is included in definition of transfer as per income tax act you need to pay capital gain tax on same.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
- First, calculate the indexed cost of acquisition of the jewellery. Basis on the cost, we will evaluate the options.
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