Tax on Selling Inherited Gold Jewellery (India)
Thank you for reading this post, don't forget to subscribe!Inheriting gold is tax-free. Tax is only paid when you sell it, and it’s treated as a Capital Asset.
1. Determining Capital Gains and Tax Rate
The tax rate depends on the total holding period (your relative’s ownership + your ownership).
| Classification | Holding Period | Cost of Acquisition (CoB) | Tax Rate on Gain |
| Short-Term Capital Gain (STCG) | ≤ 24 months | Actual Cost paid by the relative. | Your Income Tax Slab Rate (e.g., 5%, 20%, 30%), plus Cess/Surcharge. |
| Long-Term Capital Gain (LTCG) | > 24 months | Higher of: (a) Actual Cost OR (b) Fair Market Value (FMV) as on April 1, 2001 (if purchased before that date). | Flat 12.5% (plus 4% Cess and applicable Surcharge) without indexation benefit. |
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Note on Cost Basis: If the gold was purchased before April 1, 2001, you must use the higher of the original cost or the FMV as of that date. Obtain a certificate from a registered valuer to substantiate the FMV.
2. Tax Exemption under Section 54F
You can potentially claim a full exemption from Long-Term Capital Gains (LTCG) tax if you reinvest the proceeds into a residential property:
| Condition | Requirement |
| Asset Sold | Must be a Long-Term Capital Asset (held >24 months). |
| Reinvestment Amount | You must reinvest the entire sale proceeds (not just the gain). |
| New Property Ownership | You must not own more than one residential house (other than the new one) on the date of investment. |
| Reinvestment Timeline | Purchase a new house: 2 years after the sale (or 1 year before). |
| Reinvestment Timeline | Construct a new house: within 3 years after the sale. |
| Capital Gains Account Scheme (CGAS) | If you haven’t bought or constructed the house before filing your ITR, you must deposit the balance in a CGAS to secure the exemption. |
3. Other Taxes and Compliances
| Tax Type | Applicability | Details |
| TDS (Section 194Q) | Applicable if sold to a jeweller with a turnover >₹10 crore. | The buyer must deduct 0.1% TDS on the sale value exceeding ₹50 lakh in a year. This amount is creditable against your final tax liability. |
| GST | Not applicable to you. | The dealer/buyer handles the GST. |
| Cess and Surcharge | Always applicable. | A 4% Health and Education Cess and an applicable Surcharge (based on your income) are added to the final capital gains tax. |
4. Key Records to Maintain (Your Best Armour)
To avoid disputes, keep these records for at least eight years:
- Proof of Inheritance: Will, Death Certificate, Legal Heir Certificate.
- Cost Proof: Original purchase invoices OR Registered Valuer’s FMV Certificate as on April 1, 2001.
- Sale Records: Sale invoices and bank receipts.
- Exemption Proof: Bank proof of reinvestment or CGAS deposit receipt (if claiming Section 54F).
