Taxes on movable property differ from those on immovable property like land or buildings. The movable property includes items like vehicles, jewellery, art, or paintings that can be physically relocated. Tax rules for these assets vary based on their use, ownership, and location. It’s important to understand these rules to comply with regulations and calculate tax liability accurately.
Capital Gains on Movable Property
Under the Indian Income Tax Act, movable property refers to assets that can be physically moved from one place to another. These do not include immovable property like land or buildings. Movable property typically includes the following categories:
- Jewellery: This includes ornaments made from precious metals or stones like gold, silver, diamonds, etc.
- Vehicles: Any motor vehicles like cars, motorcycles, etc.
- Shares and Securities: Stocks, bonds, and other financial instruments.
- Archaeological Collections: Items of historical significance such as artifacts, coins, and manuscripts.
- Artwork: Paintings, sculptures, or any other forms of fine art.
- Bullion: Gold or silver in raw form (bars, ingots).
Capital gains on movable property arise when these assets are sold. These assets are categorized as capital assets, and the taxation depends on the holding period:
- Short-Term Capital Gains (STCG): If you sell the movable property within 24 months of acquisition, the gains are classified as short-term.
- Long-Term Capital Gains (LTCG): If you hold the asset for more than 24 months before selling, the gains are long-term Capital gains.
Income Tax on Sale of Movable Property
Capital Gains on the sale of movable property such as jewellery, cars, paintings, etc are taxable based on the nature of capital gain. Following is the tax treatment for capital gains on movable property:
| Capital Gain | Period of Holding | Income Tax Rate |
| Long-Term Capital Gain | >24 months | 12.5% |
| Short-Term Capital Gain | < 24 months | Slab Rates |
Example
Mrs X, a resident of India, bought some jewellery in February 2024 for INR 15,00,000. She sold the same in September 2024 for INR 25,00,000. Calculate the tax liability.
To determine the nature of capital gain, the period of holding for jewellery is 24 months. Since she sold out the jewellery within 24 months of purchase, this will be treated as a short-term capital gain. Below is the tax liability:
| Particulars | Amounts (INR) |
| Sales Consideration | 25,00,000 |
| Less: Cost of Acquisition | (15,00,000) |
| Short-Term Capital Gains | 10,00,000 |
| Tax liability at slab rates | 1,12,500 |
| Add: Health and Education cess | 4,500 |
| Net Tax Liability | 1,17,000 |
If in the above example, she sold the jewellery in March 2024 i.e. after 24 months from purchase, this will be treated as a long-term capital gain. Below is the tax liability:
| Particulars | Amounts (INR) |
| Sales consideration | 25,00,000 |
| Less: Cost of Acquisition | (1500000) |
| Long-Term Capital Gains | 10,00,000 |
| Tax liability at 12.5% | 1,25,000 |
| Add: Health and Education cess | 5,000 |
| Net Tax Liability | 1,30,000 |
Adjustment of LTCG against Basic Exemption Limit
The resident taxpayers can benefit from adjusting the special rate income against the basic exemption limit to reduce taxes. Thus, if your total taxable income is less than the basic exemption limit, you can adjust your special rate income such as LTCG u/s 112, STCG u/s 111A, LTCG u/s 112A, etc. against the shortfall in the basic exemption limit and pay tax on the remaining income only.
In the above example, if Mrs X had only LTCG income and no other income, the calculation of tax liability would be in the following manner:
Since Mrs. X is a resident and the basic exemption limit is not utilized, she can take the benefit of adjusting the special rate income against the basic exemption limit.
Thus, taxable LTCG = 10,00,000 – 3,00,000 = INR 7,00,000
Tax Liability = 7,00,000 * 12.5% = INR 87,500.
Reporting in ITR
The ITR Form under which the taxpayer needs to report income from capital gains includes ITR-2 and ITR-3. The taxpayer must report the following details:
- Full value of consideration i.e. sales value
- Deductions under Section 48
- Cost of acquisition i.e. purchase value (indexed COA for LTCG)
- Cost of improvement (indexed COI for LTCG)
- Expenditure wholly and exclusively in connection with transfer i.e. transfer expenses
The taxpayer can follow the below-mentioned steps for reporting their capital gains from the sale of movable property such as jwellery, cars, art collections, etc.
- Navigate to the Schedule Capital Gains
Under Schedule Capital Gains, click on the checkbox for the sale of assets other than all the above-listed items.
- Select appropriate option i.e. long term or short term.
Click on continue and on the next page select the option of Short-Term Capital Gains or Long-Term Capital Gains whichever applies to the taxpayer.
- Add details
Once the capital gain type is selected, enter the details such as sales value, purchase value, market value, etc.
For example, here Mrs. X has incurred short-term capital gains, so she needs to mention the details asked in ITR utility.
Set Off & Carry Forward Losses
The loss on the sale of movable property such as jewellery, car, painting, etc can be a Short Term Capital Loss or Long Term Capital Loss. As per the income tax rules for set off and carry forward of losses, STCL i.e. Short Term Capital Loss can be set off against both Short Term Capital Gains and Long Term Capital Gains in the current year. The taxpayer can carry forward the remaining loss for 8 years and set off against future STCG and LTCG. Further, Long Term Capital Loss can be set off against Long Term Capital Gains only. Further, the taxpayer can carry forward the remaining loss for 8 years and set off against future LTCG only.
Exemption from Capital Gain Tax on movable property
The taxpayer having long-term capital gain income from the sale of movable property such as jewellery, car, painting, etc can claim the following capital gain exemptions:
- Section 54EE – Exemption on sale of any long-term capital asset on investment in units of a specified fund.
- Section 54F – Exemption on sale of any long-term capital asset (except house) on investment in residential house property.
A taxpayer can claim the exemption by reinvesting the proceeds from the sale into a specified capital asset. Such an exemption would reduce the amounts of the capital gains and save taxes on the same. However, the taxpayer must hold the new asset for the specified period as per the relevant section. If they sell the asset before the specified period, they need to report it as an income in the relevant financial year and pay tax at the applicable rate.
Moreover, the taxpayer has the option to open an account under the Capital Gains Account Scheme and park the sale proceeds in it till the time they invest in the specified asset to claim the Capital Gains exemption.
FAQs
The taxpayer can take the benefit of deduction u/s 80C to 80U, tax loss harvesting for STCG, and in the case of LTCG they can take benefit of capital gain exemption u/s 54EE and 54F. Moreover, the benefit of an unabsorbed basic exemption limit is also available for LTCG.
Income from the sale of a car is a Capital gain and is taxable under income tax. If the car is sold within 36 months of purchase then it will be STCG and will be taxable at slab rates. Further, if the car is sold after 36 months then it will be termed ad LTCG and will be taxable at 20% with the benefit of indexation as per Section 112.
The Income Tax Act does not allow claiming deduction from Section 80C to 80U against LTCG under Section 112. However, the taxpayer can claim Chapter VI-A deductions on capital gains taxable at slab rates.
Hi @FalconZex
On business income of 2 lakhs INR: 5%
On STCG of 2 lakhs INR: 15%
You can also refer to our Income Tax Calculator
I have income Short Term and Long term Capital gains and “Income from other sources” (Bank interest and Dividend). Also, I have investments in 80C, 80D, 80CCD.
Are the investments in 80C, 80D, 80CCD considered for tax deduction?
For example if income from other source is 1 lac and 80C investment is 1lac, will this 1 lac be exempt?
STCG is 3.5lac, so 15% will be applicable on 1 lac. as 2.5 lacs is exempt.
so i pay tax only 15% of 1 lac which is Rs.15000.
please assist
Hey @Yasmin_Menon
Your are absolutely correct.
Deductions, if any, will be reduced from your Income taxable at slab rates.
The un-exhausted part of the basic exemption limit of 2.5 lakhs will be reduced from you Capital Gains.
So, in the above case you’ll have to pay 15% tax on 1 lakh.
However, if your taxable income after deductions is upto 5 lakhs, you’re eligible for rebate (12.5k) under section 87A.
Hope this helps.
Just to reconfirm,
income from other source (FD Interest and dividend) is 1 lac and 80C investment is 1lac, will this 1 lac be exempt and will not be calculated under taxable income?
Yes, this 1 lac will not be taxable after deductions.
Hey @Yasmin_Menon
Deductions under Chapter VI-A can be claimed against taxable incomes. Based on your data, here is a calculation:
Gross Total Income = 1 lac (IFOS) + 3.5 lac (STCG) = 4.5 lac
Deduction 80C = 1 lac
Total Income = 3.5 lac
Special Rate Income = 3.5 lac
Adjusted against basic exemption limit = 2.5 lac
Taxable Special Rate Income (STCG) = 1 lac
Tax on STCG = 15% of 1 lac = 15,000
Rebate u/s 87A = 12,500
Net Tax Liability = 2,500
Cess = 4% of 2,500 = 100
Total Tax Liability = 2,600
Hey @click2vikash
Here’s how you’ll be taxed under the Old Regime:
Total Income = 11 lacs
Income Taxable at Slab rates = 10 lacs
Income Taxable at Specified rates = 1 lakh
Tax on Slab Rate Income = 1,12,500
Tax on STCG = 15,000
Total Income Tax = 1,27,500
HEC = 5100
Total Tax Liability = 1,32,600
Hope this helps
I bought shares worth INR 70,000 in 2017 which are now worth around INR 1,80,000. It is long term capital gains, how much tax do I have to pay?
To differentiate capital gains into long term and short term the period is 36 months and 12 months - which one to consider?
Hey @Tanmay_mehta,
In Budget 2018, the grandfathering rule was announced u/s 112A which implies that - long term capital gains above INR 1 Lakh will be taxed at 10% after 1st Feb 2018.
Therefore to calculate LTCG:
Any tax on LTCG will be 10% above INR 1 Lakh
Hope this helps!
Refer to our learn article on LTCG on sale of Equity Shares and Equity Mutual funds