Section 2(14) defines capital asset in IT act. As per this section, capital asset means property of any kind held by an assessee whether or not connected with his business or profession but does not include;
- Stock in trade, raw material or consumable stores held for the purpose of business or profession ( surplus arises out of these are taxed under the head profits and gains of business or profession);
- Personal effects of movable nature including wearing apparel, furniture and vehicle used for personal use by the tax payer or any dependent member of such taxpayer. Following assets shall not be treated as personal effects as these are specifically excluded from the list;
- Archaeological collections
- Any work of art
- Rural agricultural land i.e. agricultural land which is not situated within the specified area as mentioned under section 2(1A) of IT act.
- Gold bond as issued by the central government (these instruments are not is existence now).
- Gold deposit bonds issued under the gold deposit scheme, 1999.
Transfer of jewellery, archaeological collections, drawings, paining, sculpture and any work of art will attract capital gain tax as these assets are specifically excluded from the list personal effect.
Relevant points on Capital Asset
- To qualify as an agriculture land it must be an agriculture land at the time of sale. The relevant factor for determining depends on the use of land on the date of transfer.
- Jewellery for the purpose of capital asset includes following;
- Ornaments made of sliver, gold, platinum or any other precious metal or an alloy containing one or more of such metals, whether or not containing any precious or semi precious stones and whether or not worked or sewn into any wearing apparel;
- Precious or semi precious stones, whether or not set in any furniture, utensil or other articles or worked or sewn into any wearing apparel.