Income tax calculator: Selling gold (physical, digital or paper) after holding it for more than three years is subject to a 20% Long-Term Capital Gains (LTCG) tax. However, under certain conditions, one can avoid paying this tax even after holding the precious bullion for more than three years. Under Section 54F of the Income Tax Act, one may claim an exemption from income tax on net wealth derived from the sale of capital assets such as stocks, bonds, gold, etc., but other than immovable property. However, the claim may be possible if all the money received from the sale of gold is used for the purchase of a new residential property.
Explaining the income tax rule on the sale of gold, Pankaj Mathpal, MD and CEO of Optima Money Managers, said: “The income tax rule states that one will have to pay a 20% LTCG tax with indexation if the seller has held his gold for longer However, if the entire amount received from the sale of gold is used for the purchase of a new residential property or for the construction of a property residential property, the seller of gold can claim a long-term capital appreciation income tax exemption on their sale of gold.
However, Pankaj Mathpal argued that to claim gold sale tax exemption one must purchase a new residential property within 2 years of selling gold and in the case of constructing a new property residential, the time limit is 3 years.
Echoing the views of Pankaj Mathpal, Archit Gupta, Founder and CEO of Clear, said: “If you cannot use all of the sale proceeds to buy/build a new residential property before the due date of the deposit of the ITR, you must deposit the proceeds from the sale of the gold assets. in the capital gains account of a public sector bank. You can use these funds to buy/build a new residential property within the required time frame.
Archit Gupta of Clear listed the three conditions mentioned below where the income tax exemption under Section 54F becomes applicable:
1]You must purchase a new residential property one year before the sale of the fixed asset; or
2]You must purchase a residential property within two years of the date of sale of the fixed asset; or
3]You must build/construct a residential property within three years of the date of sale of the fixed asset.