Tax deduction urgent query

Priyanka,

Sale value of your car will come under Capital Gains of Income Tax.

Where you will be able to set off your purchase value on the sale value and it will be liable to Short Term Capital Gains (STCG) or Long Term Capital Gains, depending on the period of holding of your car.

In your case it will be STCG, since you have just purchased the car a year back and it will be taxed at 15%.

Regards,

Jinay Savla

However, IF the car is held for personal use, it will not fall within the definition of Capital Asset and hence there will be no tax liability.

If you were not using your car for the purpose of your business/ profession, then it is not covered under the Capital Assets as per section 2(14). Hence you are not liable to any capital gain tax. There is no income tax implication in this matter.

agreed with Mr.Dharmaraju and Mr. Vineet Goyal.

IN WHICH MONTH YOU HAVE PURCHASED THE CAR IN 2011 ?

SALE VLUE OF CAR IS HIGHER THEN BROUGHT VALUE THEN ON EXCESS AMOUNT OF VALUE IS IS YOUR INCOME WHICH IS INCOME FROM SALE OF FIXED ASSETS.i.e. OTHER INCOME

SALE  VALUE OF CAR IS NOT INCOME

I PURCHASE A LAN OF RS. 60K IN 1995 & MADE A BUILDING WHICH COST IS 2.4

TOTAL VALUE OF IT 3L IN 1995

I SOLD IT 8L IN 2011.

WHAT IS THE LIABILITY TO PAY CAPITAL GAIN TAX.

(NOTE I HAVE PURCHASE A LAND OF RS. 8L AT THE SAME TIME OF BUILDING SOLD)

Dear priyanka,

As per Sec-2(14), car comes under the definition of Capital asset. At the time of sale the sale value will become the consideration received and from this you are allowed to set off the purchase value.

Note: Indexation is not permitted incase of short term capital asset.

As you have purchased the car in 2011, it is a short term capital asset. So STCG will arrise in the year of sale.

Please note that the rate of STCG is the normal rate not 15%. 15% is applicable incase of Sec-111A not in other cases.

Incase of any other query please revert.

Thnks everyone for your valuable suggestions.......

It is clear that movable assets except few exceptions (Jewellery, etc.) are not capital assets. Hence not taxable.

car not being a capital asset not liable to cap gain tax..

if the sale value is less than cost

no liability arises