Personal belongings are not capital assets
The good news first, and it is genuinely good. When you sell your personal car, your furniture, your electronics or your household goods, there is no tax. The reason is in the definition of what can be taxed at all: Section 2(14) defines a capital asset and specifically excludes personal effects, meaning movable property held for your personal use or that of a dependent family member. A used car, a sofa, a fridge, a television, all of these are personal effects, so selling them does not produce a capital gain and there is nothing to report. There is not even a TDS issue, because the buyer of an asset from an NRI only has to withhold tax on a sum that is actually chargeable, and a personal-effects sale is not.
There is one category to be careful about, because it feels personal but is not treated that way. The law keeps jewellery, drawings, paintings, sculptures, archaeological collections and any work of art as capital assets, so if what you are selling is really a piece of jewellery or a painting, that is taxable, and a separate matter from your car and sofa. But for ordinary household belongings, the exclusion holds and the sale is tax-free.
The one exception: a business car
The exception that catches people is the car used for business. If your vehicle was used in a business or profession and you had been claiming depreciation on it, then for tax it is not a personal effect at all, it is a business asset, part of what the law calls a block of assets. When you sell a business asset like that, the gain is taxed under Section 50 as a short-term capital gain, regardless of how long you owned it, because you are effectively giving back the depreciation you claimed. So the same physical car can be tax-free or taxable depending on how it was used and whether depreciation was taken.
For most NRIs clearing out before a move, this does not apply, the family car and the household goods are genuine personal effects and the sale is simply tax-free. It only becomes a capital-gains question if the vehicle was a business asset. Under the Income-tax Act, 2025 the depreciable-asset provision is renumbered to Section 74 from FY 2026-27, but for a sale under the old law it is still Section 50. A practising CA confirms which side of the line your sale falls on, so you neither pay tax you do not owe on personal goods, nor miss a genuine business-asset gain.