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How to calculate tax liability on LTCG accrued from selling gold?
November, 26th 2019

An individual is required to pay tax either short term capital gains or long term capital gains accrued due to selling of financial assets such as mutual funds and physical assets such as gold. If you have sold gold, you are liable to pay tax.

In September, I sold 300 grams of gold bought in the 1990s. I am 72 and file my tax returns, though my taxable income is below Rs 5 lakh. Do I need to pay LTCG tax? How should I calculate the tax liability on the gains?
Shubham Agrawal, Senior Taxation Advisor, says, "The calculation of LTCG can be done by subtracting the original purchase price or fair market value of gold on 1 April 2001, whichever is higher, from the selling price. The resultant capital gain will be taxed at 20.6%. Effective 1 April 2019, under Section 54EC of the Income tax Act, one can invest only LTCG from land and building in specified bonds. Your asset type is gold, therefore it is not eligible for investment in this section. However, you can invest the sale proceeds in a residential property and save this tax, provided all the other conditions of Section 54F of the Act are adhered to."

I owned some shares and mutual funds jointly with my wife, with her as the first holder. After her death, I transferred the shares and mutual funds in my name. If I sell the investments, what will be the tax implications for me?
Amit Maheshwari, Partner, Ashok Maheshwary and Associates says, "The gain or loss will have to capital gains tax for you. The gain or loss would be long-term or short-term depending upon the period of holding and the type of fund. Assuming the shares are listed and the funds are equity oriented, investments held for more than 12 months would lead to LTCG tax on gains beyond `1 lakh. The period of holding would include the time when these investments were in the name of your wife. The capital gains will be calculated by deducting cost of acquisition from the sales consideration. If the shares are unlisted, and if the investments have been held for more than two years, it would lead to LTCG tax, otherwise it will result in short-term capital gains tax. In case of debt funds, gains are considered long-term if investments are held for more than three years. Long-term gains on sale of unlisted securities and debt-oriented funds are taxable at 20% and shortterm gains are taxable as per applicable slab."

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