Jewellery and artistic works are unique assets that present significant valuation challenges for tax purposes. The Income Tax Rules, 2026 establish a structured framework for determining the Fair Market Value of these assets through Rule 57, with specific provisions for registered valuer involvement.
The Valuation Framework
For jewellery and artistic works, Rule 57 prescribes a cascading methodology that prioritises simplicity while providing for professional valuation when circumstances warrant.
Primary Method: Open Market Price
The primary method of valuation is the price which the jewellery or artistic work would fetch if sold in the open market on the valuation date. This reflects the fundamental principle that FMV is what a willing buyer would pay a willing seller in an arm's length transaction.
Invoice Value for Registered Dealer Purchases
If the jewellery or artistic work is received by way of purchase from a registered dealer on the valuation date, the invoice value is the FMV. This pragmatic approach recognises that a recent arm's length transaction with a registered dealer provides reliable evidence of value.
The ₹5,00,000 Threshold for Registered Valuer Reports
Where jewellery or artistic works are received through any means other than purchase from a registered dealer, and the value exceeds ₹5,00,000, the assessee may obtain a report from a registered valuer.
Key Implications
Optional, Not Mandatory: The registered valuer report is optional rather than mandatory. The assessee may choose to rely on other evidence of open market value, though the tax authority may question the valuation.
Threshold Applies to Value, Not Cost: The ₹5,00,000 threshold applies to the value of the asset, not its cost of acquisition. This is an important distinction that practitioners must appreciate.
Valuation Date: The valuation must be as on the valuation date specified for the relevant section【56†L0】.
Registered Valuer Qualifications
Rule 247 of the Income Tax Rules, 2026 establishes detailed qualification requirements for registered valuers.
For Jewellery Valuers
Jewellery valuers must have been, for a period of not less than five years, a sole proprietor or partner in a partnership firm carrying on jewellery business with an average annual turnover of not less than ₹50 lakh or profit, including fees for valuation, of not less than ₹5 lakh in the last three of the five preceding years.
For Works of Art Valuers
Works of art valuers must have:
- Specialisation by virtue of academic and professional pursuits in the particular line of art
- Served in capacities such as Director General or Superintending Archaeologist of the Archaeological Survey of India, Director of National Museum, principal of a Government School of Art, or member of the Art Purchase Committee of specified museums or the Lalit Kala Akademi
Disqualifications
Registered valuers must not be:
- Dismissed or removed from Government service
- Convicted of an offence connected with any income-tax proceeding or on whom a penalty has been imposed
- An undischarged insolvent
- Convicted of any offence and sentenced to a term of imprisonment
- Found guilty of misconduct in professional capacity
Application Process
The application for registration as a valuer must be made in Form No. 169, accompanied by a non-refundable fee of ₹10,000【246†L0-L1】. The competent authority—Principal Chief Commissioner, Chief Commissioner, or Director General—will evaluate applications and must dispose of them within six months.
Valuation Report Requirements
The valuation report prepared by a registered valuer must be in Form No. 170【249†L0】. The report must contain:
- Description of the asset valued
- Valuation methodology applied
- Supporting evidence and assumptions
- Date of valuation
- Signature and registration details of the valuer
Practical Considerations
When to Obtain a Registered Valuer Report
- When the asset value exceeds ₹5,00,000 and the asset is received through inheritance, gift, or other non-purchase mode
- When the open market price is not readily ascertainable
- When the transaction is likely to be scrutinised by tax authorities
- When the valuation is for a significant transaction
Documentation Requirements
Maintain:
- Valuation report in Form No. 170
- Evidence of the registered valuer's qualifications and registration
- Supporting documents for the valuation methodology
- Photographs of the asset valued
Expert Legal Guidance
Valuing jewellery and artistic works correctly is essential for capital gains computation and tax compliance. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping taxpayers navigate the valuation requirements and engage appropriate registered valuers.