Tax Query: Do I need to pay tax on the sale of my personal assets?

I am planning to sell my motor car, which I use for my employment and my personal use. Do I need to pay any capital gains tax on the sale of the motor car? Is there a capital loss on the sale of the motor car? 

The motor car kept by you for your personal use is a ‘personal asset’ for tax purposes. A ‘personal asset’ does not fall under the purview of a ‘capital asset’. Also, the use of your car for employment does not make it a capital asset either. You are not entitled to depreciation on your personal motor car. Hence, the car is also not a depreciable asset giving rise to capital gains. The gain or loss is neither a capital gain nor a capital loss. You cannot claim the loss arising from the sale of a personal asset as a deduction. 

Also Read: Tax Query: What is the last date to pay self-assessment tax for AY 2020-21?

I am filing my income tax return for the AY 2020-21 with income from salary, capital gains and FD interest. My net salary income is Rs 15 lakh, short-term capital gains on shares of Rs 50,000, and FD interest is Rs 1,50,000. The TDS on my salary is Rs 2,73,000, and FD is Rs 15,000. I see interest liability at the time of e-filing. Am I liable to pay penal interest?

You need to estimate your tax liability and pay advance tax in each financial year. Your advance tax liability arises only when the tax liability after reducing TDS, TCS and other tax credits is Rs 10,000 or more, for a financial year. Each year, the advance tax payments are due in four instalments, namely 15 June, 15 September, 15 December and 15 March. Any deferment in paying the advance tax instalments give rise to interest liability 1% p.m. under section 234C. The penal interest under section 234C gets calculated only until 31 March 2020. 

In addition to interest under section 234C, you are liable to pay interest under section 234B if the TDS amount falls short of 90% of the tax due. In your case, the total tax due and net tax due is as below:

Total income Total tax due TDS Net tax due 90% of the total tax due
Rs 17,00,000 Rs 3,35,400 Rs 2,88,000 Rs 47,400 Rs 3,01,860

The interest calculation under section 234B begins from April 2020 and continues until the payment of the balance tax due. You need to pay the interest dues along with the tax dues before e-filing your income tax return.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in

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