What is a Capital Asset?

According to section 2(14), a capital asset means –

(a) Property of any kind held by an assessee, whether or not connected with his business or profession;

(b) Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the SEBI regulations.

However, it does not include

(i) Any stock-in-trade consumable stores or raw materials held for the purpose of the business or profession of the assessee;

(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

  • Jewellery;
  • Archaeological collections;
  • Drawings;
  • Paintings;
  • Sculptures; or
  • Any work of art.

NoteSilver Utensils constitute personal effects and no capital gain will be arise.

            Gold Utensils are not personal effects and are capital gains.

(iii) Rural agricultural land in India

(iv) 6½% Gold Bonds, 1977, or 7% Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government;

(v) Special Bearer Bonds, 1991 issued by the Central Government;

(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government.

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