Any transfer of jewellery subject to capital gains tax in hands of seller

Written by Suresh Surana | Updated: Oct 23 2012, 09:00am hrs
I went to Germany on an eight-day official tour and extended my stay (as a vacation) for three days. I was accompanied by my wife and son. All expenses, including travel fare, will be borne by my company. How much amount will be treated as perquisite in my hands

Rajender Pradhan

Any expense incurred on an employee during the official tour is not treated as a perquisite. However, when it is extended as a vacation, expenses on the employee during the vacation period (boarding, lodging and local tours) and all expenses for the entire period, including the official tour period on the members of his household who accompanied him, will be treated as perquisite.

My friend sold me her gold jewellery for R3.5 lakh (market value R4.25 lakh) and after holding it for eight months, I sold it to another friend for R4.15 lakh. How will capital gain be taxed

Aparna Kamath

As per income tax laws, any transfer of jewellery is subject to capital gain tax in the hands of seller (that is, your friend). The gain may be either short-term (if the holding is up to 36 months) or long-term, depending on the period of holding. At the same time, the inadequate consideration (i.e., difference between the market value of jewellery and the value at which it was sold, if it exceeds R50,000) will be taxable in the hands of buyer (that is, in your hands) as income from other sources. As such, the gain of R75,000 shall be subject to tax as income from other sources in your hands as per the slab rates applicable in your case.

Later, when you sell it to another friend, for computing the cost of acquisition in your hand, it will be sum of the purchase price and the deemed income taxed in your hand at the time of purchase, that is R 4.25 lakh. As the sale value is R4.15 lakh that is, less than your deemed cost (R4.25 lakh) there will be no gains in your hands.

I am a salaried employee. I have not filed I-T returns for FY12. My employer has deducted TDS on salary and with respect to other income of R10,000. I directly paid the tax on July 30, 2012. Do I have to pay interest for delay if I file the ITR now

Roopak Sen

Interest for delay in filing returns is charged under Section 234A. Interest is payable if tax has not been deposited prior to the due date of filing the returns. As in your case, the entire tax due has already been paid and the advance tax liability is less than R10,000, the question of levy of interest under other Sections for delayed and deferred payment also does not arise. Nevertheless, a penalty of R5,000 may be levied if you file the ITR on or after April 1, 2013.

Recently, I suffered loss on sale of shares that I had purchased seven months back. Besides, I made short-term capital gain on sale of units of a debt-oriented mutual fund. Can I set off the short-term capital loss on sale of shares against the short-term capital gain on sale of units

Subodh Kumar

In the case of shares and units of mutual fund, the asset is short term if it is held for up to 12 months. In your case, the shares and units of mutual fund will be a short-term capital asset and any gain/loss arising on their transfer will be short-term in nature. Under Section 70 of the Income Tax Act, short-term losses can be set off against any other short-term gains arising under the same head of income, i.e., Capital Gains. Thus, you can set off the short term capital loss on sale of shares against the short-term capital gain on sale of units of debt-oriented mutual funds.

The writer is founder of RSM Astute Consulting Group Send your queries at [email protected]