Income tax calculator: Buying a house is one of the important financial decisions of a winning person. Sometimes an individual sells other large assets like stocks, gold, mutual funds, etc. to buy a house. However, upon recognition of a profit or sale of an asset, income tax is levied in the form of long-term capital gains tax (LTCG). However, the tax authorities allow the LTCG tax exemption under certain conditions. For example, if a home buyer sells gold to buy a new house or build a new house.

Speaking on the income tax rules involved in the sale of gold, Pankaj Mathpal, MD and CEO of Optima Money Managers, said: “If a person sells gold after holding it for 3 years or more, then in this condition, the gold seller will have to pay 20% LTCG tax with indexation.However, if the gold seller uses all of the proceeds received for the purchase of a new house or the construction of a new residential property, in which case the gold seller can claim an exemption from the LTCG tax.”

However, Pankaj Mathpal said that the LTCG gold sale tax exemption can only be claimed when the new house is purchased within 2 years of the gold sale and a new residential property is built within 3 years following the sale of gold.

On how to avoid the LTCG tax on the sale of gold, Archit Gupta, founder and CEO of Clear listed these three important pieces of information:

1]You must purchase a new residential property one year before the sale of the fixed asset; Where

2]You must purchase a residential property within two years of the date of sale of the fixed asset; Where

3]You must build/construct a residential property within three years of the date of sale of the fixed asset.

Under Section 54F of the Income Tax Act, one may claim an exemption from income tax on net wealth derived from the sale of capital assets such as stocks, bonds, gold, etc., but other than immovable property. However, the claim may be possible if all the money received from the sale of gold is used for the purchase of a new residential property.

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