Why art is taxed when your car is not
There is a real distinction in the law between ordinary belongings and collectibles. Section 2(14) defines a capital asset and excludes personal effects, the movable things you hold for personal use, so selling your car, furniture or clothes produces no taxable gain. But the same definition then carves specific things back in and keeps them as capital assets: jewellery, drawings, paintings, sculptures, archaeological collections, and any work of art. So the moment you sell a painting, an antique, a sculpture or jewellery, you are selling a capital asset, and any gain is taxable, exactly the outcome people do not expect when they think of it as a personal possession.
How much you pay depends on how long you held it. Art and collectibles held for more than two years give a long-term capital gain, taxed at 12.5 per cent under Section 45 and the long-term rate rules. As an NRI you should not expect any softening of that figure: the indexation that used to inflate the cost was removed for everyone in 2024, and the currency-fluctuation adjustment that non-residents get on Indian shares does not apply to art, it is limited to shares and debentures. So your gain is simply the sale price minus your cost, taxed at 12.5 per cent.
Inherited art, the artist, and the antique trap
Cost is where inherited pieces need care. If you inherited the art or received it as a gift, you do not have a purchase price of your own, so the law uses the previous owner's cost under Section 49(1), and the previous owner's holding period is added to yours, which usually makes the sale long-term. If you bought it, your cost is what you paid. One important exception: if you are the artist and you are selling works you created yourself, that is not a capital gain at all, it is business or professional income taxed at slab rates, because your own works are your stock in trade.
Two more things for an NRI. On tax, art situated in India and sold by an NRI produces Indian-source capital gains, so the buyer must withhold TDS under Section 195, the section for payments to non-residents, not the 1 per cent property TDS, which does not apply here. And there is a non-tax trap with genuine antiques: under the Antiquities and Art Treasures Act, an object that is over a hundred years old is an antiquity, its export by private persons is prohibited and it has to be registered, so a foreign buyer may simply not be able to take the piece out of India. That can matter as much as the tax when you plan a sale. A practising CA fixes the character and the cost, computes the 12.5 per cent correctly, and handles the buyer's withholding.