We have some ancestral gold and diamond jewellery whose value is approx. Rs 20 lakh by government approved valuer, which we plan to sell to purchase a property. What are the tax implications and paperwork required? The jewellery is not in the book of accounts.
As the gold and diamond jewellery are ancestral property then the gain on the transfer of the same will be chargeable to the tax under the head of Long-Term Capital Gains. If the said gold and diamond jewellery is held previously to 05.04.1980, the fair market value of the said gold and jewellery is to be first determined depending on the basis of the valuation report of the government approved valuer, which will be considered as the cost of the purchase.
Thereafter, the indexed cost of the acquisition is to be computed and the said indexed cost is to be reduced from the sale consideration to determine the long-term capital gains. If you wish to purchase a residential property out of the sale crosses of the gold and diamond jewellery then the subject to complying with the provisions of the Section 54F, the deduction from the capital gains can be claimed.
Raj has a flat in joint name with my wife and the money spent on buying it was from his income. Also, he had taken a home loan to purchase this flat which was entirely repaid in 3 years ago. Now that the stamp duty and the registration charges on the gift to family members have been reduced drastically in Kolkata (Rs 200 stamp duty only), it makes sense for him to gift this flat to his wife without consideration.
His wife is housewife and has small income from tuitions. His questions are: will the rental income have to be clubbed with his income? What are the implications of the gifting on the tax benefit enjoyed by him in the past? What will be the capital gain in case she decides to sell this flat later?
As per the provisions of the section 64(1)(iv), the rental income arising to your wife from the transferred of the flat to her by way of gift will be included in your total income. If you gift the flat to your wife then it will not have any impact on the tax benefit enjoyed by you in the past. If your wife decides to sell the flat and the capital gains will be computed in her hands.
The cost and date of the purchase of the flat in your hands will be assumed to be the cost and date of the purchase of the said flat in her hands. Therefore, due to the provisions of the section 64(1)(iv), the capital gains on the sale of the flat will be included in your total income.
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