Money earned after selling my old car do I have to pay tax
Sir, I have sold my 4 years old car in 4.5 lac. I would like to know weather this amount is taxable or not if taxable than what I should do? And should I declare this amount in my annual return filing. Regard
The querist wants to know whether the consideration received from sale of a car is subject to tax (direct) or not and querist further wants to know if he needs to declare this consideration in its tax return.
LEGAL PROVISIONS AND ANALYSIS:
NOTE: It is presumed that the car owned by the querist is for personal use and not used for business purposes.
As the querist was using this car used for personal use it is out of the definition of Capital Assets given under Section 2(14) of Income Tax Act, 1961. Thus, the consideration received from its sale will not be considered as a transfer of capital assets and cannot be subject to tax under Section 45 of the Act.
Further, this transaction cannot be subject to tax under the head of ‘income from other sources’ also as it falls out of the purview of Section 56 of the Act. Therefore, consideration received in respect of sale of personal car is not liable to income tax.
Coming to the next question regarding declaring this consideration in the income tax return; as consideration received by the querist does not fall under the category of taxable income under any of the five heads of income, the online filing portal of income tax return will not acknowledge this receipt and thus, in a way there is no need to declare this income in the return.
There is no liability of income tax on the consideration received in lieu of sale of personal car and also there is no need to declare this consideration in the ITR return.
Advocate Deepak ThackurBeriwalah Bagh, Delhi
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