How to Avoid Paying 20% ​​LTCG Tax After Selling Gold and Stocks

How to Avoid Paying 20% ​​LTCG Tax After Selling Gold and Stocks

Physical or paper sale after three years of holding invitations Long-term capital gains (LTCG) by 20%. But that may not always be the case. But there are certain conditions which, when met, allow the holder not to pay the tax despite holding the bullion even for more than three years.

Section 54F of the Income Tax Act provides that one may claim exemption from tax on gains from the sale of certain fixed assets such as stocks, bonds, gold, etc other than real estate. However, the exemption will be granted if the sale proceeds are used to purchase residential property only.

The IT rules clearly state that anyone holding gold or other assets mentioned above must pay LTCG OF 20% with indexation. But if the full amount of the gold sale is used to purchase residential property, no tax will be charged. However, the purchase of a property must be completed within two years of the sale of the gold and within three years in the event of the construction of the new residential property.

However, if the entire sale proceeds cannot be used to buy or build a property by the tax return filing due date, the gold sale proceeds must be deposited into the capital gains from a public sector bank. These funds can only be used to purchase a residential property within the specified time.

Three conditions under which the LTCG exemption under Section 54F is granted are: the seller must purchase residential property one year prior to the date of sale of the gold or other fixed assets; within two years of the sale of the fixed asset or the seller must build or construct the residential property within three years from the date of the sale of the fixed asset such as gold, stocks or bonds.

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