1 week ago

When Selling Personal Items Triggers Capital Gains Tax

Selling your old phone, furniture or jewellery? Know when you have to pay tax and what counts as ‘personal effects’ · livemint.com

Most things you use every day can usually be sold without paying tax on the sale.

Examples include clothes, furniture, utensils, cars, scooters and phones.

However, special items such as jewellery and artwork are treated differently.

If you sell one of these items for more than it cost, the profit may be taxable.

Jewellery includes items made with precious metals or precious and semiprecious stones.

An ordinary item can also become taxable if it contains these precious materials.

Tax is charged on the profit, not the entire amount received from the buyer.

If jewellery was inherited or gifted, the earlier owner’s cost and ownership period may be considered.

Losses from selling personal items generally cannot be used to reduce other income or carried forward.

Key facts

Generally tax-exempt items: Clothing and apparel, furniture, crockery or utensils, cars, scooters, mobile phones and laptops used personally.
Taxable personal items: Jewellery, archaeological collections, drawings, paintings, sculptures and other works of art.
Jewellery definition: Ornaments made from silver, gold, platinum or other precious metals, related alloys, and precious or semiprecious stones.
Taxable amount: Tax is calculated on the profit or capital gain, not the full sale proceeds.
Inherited or gifted jewellery: The previous owner’s acquisition cost and holding period may be considered under income tax rules.
Example: Jewellery bought for ₹2 lakh and later exchanged at ₹4 lakh may produce a taxable ₹2 lakh gain.
Losses: Losses on exempt personal effects cannot be set off against other capital gains or income and cannot be carried forward.

livemint.com · 1 week ago