Which are the Assets not Taxed under Capital Gain Head of Income Tax Act

As per section 2(14) of the Income Tax Act, Any property owned by person, whether or not that asset is used by him for business or profession. From income tax perspective meaning of capital assets is very wide in nature and mostly all the assets are included in the definition of the capital assets.

Following assets are excluded from the meaning of capital assets

  1. Any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession
  2. Personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes—

    (a)  jewellery;

    (b)  archaeological collections;

    (c)  drawings;

    (d)  paintings;

    (e)  sculptures; or

    (f)  any work of art.

    3. Rural Agriculture land .i.e. land situated outside the jurisdiction of a municipality or situated within the jurisdiction of a municipality but having population less than ten thousand.

    Reference: Section 2(14) of the Income Tax Act

    “capital asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include—

    (i)  any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession ;

    (ii)  personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes—

    (a)  jewellery;

    (b)  archaeological collections;

    (c)  drawings;

    (d)  paintings;

    (e)  sculptures; or

    (f)  any work of art.

    Explanation.—For the purposes of this sub-clause, “jewellery” includes—

    (a)  ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;

    (b)  precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel;

    (iii)  agricultural land in India, not being land situate—

    (a)  in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or

    (b)  in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;

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