Selling gold jewellery attracts capital gains tax, no exemption on reinvestment

Selling old gold jewellery triggers capital gains tax, and using the proceeds to buy new jewellery does not automatically make the gain tax-free. The income tax department treats jewellery as a capital asset, so any profit from its sale is taxable. The tax applies only to the profit, not the full sale amount.

If the jewellery is held for more than 24 months, the profit is treated as long-term capital gains and taxed at 12.50% without indexation. If sold within 24 months, it is short-term capital gains taxed at the individual's slab rate. Jewellery received as a gift on marriage or from specified relatives, or through inheritance, is tax-free at receipt.

Long-term capital gains from selling gold can be exempted under Section 54F if the sale consideration is invested in a residential house, provided the seller does not own more than one house on the date of sale. Items like furniture, clothing, and daily-use electronics are exempt as personal effects, but jewellery, paintings, and sculptures are not.

Livemint reports that if furniture or clothing has precious metal or stones embedded, its sale will also attract tax. Taxpayers must keep purchase and sale documents for large transactions.