taxable amount

Taxable amount under capital gain= nil.

Car is not treated as capital asset, consequently its transfer doesn't attract capital gain.

Yes no tax repurcussion for the seller. On a different note, isn't it same as a gift of Rs 200000 in the hands of the buyer. Hence resulting in a tax in the hands of buyer for gift tax.

Hello Mr. Neeraj, can you explain your point in detail plz?

Dear Dhruv, let me try on that. In my view this transaction is similar to the buyer receiving a gift of 2,00,000 from the seller. Hence this 2,00,000 will be taxable in the hands of the buyer.

We have to compare it with a case:  where if seller sells the car in Market for 5,00,000 (fair market value) and gives all of this to buyer. Since buyer has returned 3,00,000 lakh back. The net amount given from seller to buyer is 2,00,000. Since seller is a non relative this gift of 2L will be taxable with buyer.

Dear Dhruv, let me try on that. In my view this transaction is similar to the buyer receiving a gift of 2,00,000 from the seller. Hence this 2,00,000 will be taxable in the hands of the buyer.

We have to compare it with a case:  where if seller sells the car in Market for 5,00,000 (fair market value) and gives all of this to buyer. Since buyer has returned 3,00,000 lakh back. The net amount given from seller to buyer is 2,00,000. Since seller is a non relative this gift of 2L will be taxable with buyer.

Dear Neeraj sir , Thank you for your detailed answer.
I want to make some changes in your view regarding this transaction.
1. Car is not recognized as a property as per the explanation given.
2. According to you, 200000 is taxable but according to me the liability of tax does not arise in this case.
Reason: As per explanation to section 56(2)(vii) Property means;
- Immovable property being land or building or both
-Shares & securities
-Jewellery
-Archaeological collections
-Drawings
-Paintings
-Sculptures
-Any work of art
-Bullion.

So, If a car is received by gift or purchased for a consideration which is lower than fair market value, Section 56(2)(vii) is not applicable.

Please take into consideration this matter.

If you found my view incorrect, than plz tell me about that.
-Thanks.

In this case , Gift is not treated as transfer of capital asset as per section 47 hence not chargeable to seller & Car is not treated as property so this will not attract gift tax . So nothing is chargeable to tax.


& sorry , my first reply was incorrect as I was confused between capital gain & gift .
So, don't take into consideration what I have stated in the very first reply/answer.

Sorry again, My final view:
“Car is not capital asset, so its transfer doesn't attract capital gain."
“ Car is not property as per section 56(2)(vii), so doesn't attract gift tax."

so, nothing is chargeable to tax.

Dear Dhruv, lets agree to disagree. My holding onto my view won't make yours wrong. However I have presented my point and I respect your opinion as well. However we can take Dhirajlal Sir's view on it. Shall we repost the question. He normally doesn't look at threads which are already answered.

okay..i m going to repost this question.