Do not pay taxes on sale of personal effects aka TV/Car/Furniture/others

Capital Asset & Personal Effects –

Capital asserts is a property of any kind held by the person, but specifically excludes the following:-
– Stock in trade held for business or profession
– Personal Effects i.e., movable property, wearing apparel (excluding jewellery), and furniture held for personal use.
– Agricultural land
– Specified gold bonds issued by the government.
– Bearer bonds issued by the government.

Thus, the term capital asset is a broad term and it specifically excludes personal effects of the assessee. However, jewellery and precious stones whether or not worked into apparel or set into furniture, utensil or articles, is considered as capital asset.

Taxability –

Gains or losses arising from sale of capital assets are chargeable to capital gain tax in the year in which transfer takes place.

While on the other hand personal effects are privately owned articles being used daily by the owner such as furniture, TV sets, music system, furniture, motor car, scooter for personal use, thus gain or losses from sale of personal effects are not chargeable to capital gain tax. So if you sale your household furniture, you will not have to pay taxes.

So if an assessee from a royal family sells his silver utensils, which he was using on daily basis to serve food, he/ she don’t have to pay capital gain tax. But if an assessee sells the inherited silver utensils, he/ she will have to pay capital gain taxes.

So, knowing about status of an asset is important, as to whether it is a capital asset or not.
If the asset falls in the category of capital asset, its transfer will attract capital gain tax. While if an assessee proves that the asset sold is not a capital asset, he will not be liable to pay capital gain taxes.

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