Keith Mack
The term 'movable property' is used to refer to possessions, belongings, assets, liabilities, and creations. In the Indian context, movable property is defined as any property that is not affixed to the land, irrespective of its appearance, shape, size, or colour. This includes vehicles, electronic devices, jewellery, books, and timber. Movable properties are subject to certain restrictions and conditions under the Central Sales Tax Act, 1956, and the General Sales Tax Act of the concerned state. They are also governed by different laws and carry equal importance in terms of the rights and duties associated with them.
| Characteristics | Values |
|---|---|
| Definition | Any physically mobile property or something that can be easily moved by any person |
| Registration | Not required under the Indian Registration Act 1908 |
| Taxation | Subject to GST |
| Inheritance | Easier transferability without any will, partition, gift deed, or simultaneous registration |
| Security Against a Loan | Used as a pledge rather than a mortgage or lien |
| Ownership | Determined by basic division between movable and immovable properties |
| Examples | Vehicles, electronic devices, jewellery, books, timber, etc. |
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What You'll Learn
Taxation differences
Movable property in India is subject to different taxes and tax treatments than immovable property. Movable properties are subject to central sales tax and sales tax under the Central Sales Tax Act, 1956, and the General Sales Tax Act of the concerned state. They are also subject to certain restrictions and conditions. On the other hand, immovable property is subject to stamp duty as per the Indian Stamp Act, 1899.
Movable property, as per Section 22 of the Indian Penal Code, 1860, includes corporeal property of every description, except for land and assets attached to it. This means that anything that is not affixed to the land or earth, irrespective of its size, shape, or quantity, is considered movable property. Examples include vehicles, electronic devices, jewellery, books, and timber. Movable property can be transferred through gift, sale, exchange, lease, actionable claim, or mortgage.
Immovable property, on the other hand, is defined as any property with rights of ownership attached to it and that cannot be moved. This includes real estate such as villas, apartments, and land. The transfer of ownership of immovable property typically requires registration under the Indian Registration Act, 1908, if its value exceeds a certain amount.
The distinction between movable and immovable property is important for tax purposes, as different taxes apply to each type of property. Movable property is subject to GST, while immovable property is subject to stamp duty. This distinction also affects the transferability of the property, with movable properties having easier transferability without any will, partition, gift deed, or simultaneous registration.
It is worth noting that there are some conflicting judgments and interpretations regarding what constitutes movable and immovable property. For example, mortgage debt is considered immovable property, but for attachment purposes, it is treated as movable property. In another example, standing timber is considered immovable property, but once it is cut and sold for timber purposes, it becomes classified as movable property.
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Inheritance and transferability
In India, the concept of property is of great significance, as there is no single, unified definition of the term in legislation. Instead, the term is used broadly and encompasses a bundle of rights, including the right to own, enjoy, retain, alienate, and possess.
Movable property, as defined by Indian law, refers to any physically mobile property or something that can be easily moved by any person. It includes corporeal property of every description, except for immovable property such as land and assets attached to it. This distinction is important as different laws and procedures apply to the transfer of movable and immovable properties.
Movable properties have easier transferability compared to immovable properties. They can be transferred without the need for a will, partition, gift deed, or simultaneous registration. This flexibility in transferring movable properties is a key advantage and simplifies the process of passing on assets to heirs or beneficiaries.
The Transfer of Property Act, which dates back to 1882, applies to both movable and immovable properties. However, the specific classification of property as movable or immovable is crucial due to differences in applicable laws and procedures. Misinterpretation or confusion between these two categories can lead to issues during sales or litigation.
Movable property can be transferred through various means, including gift, sale, exchange, lease, actionable claim, or mortgage. The right to dispose of movable property is included in the broader concept of ownership rights. However, if a property is forbidden for transfer by law, possibility, morality, or public interest, it cannot be transferred.
In the context of loans, movable property can be used as a pledge or collateral for a Loan Against Property (LAP). This provides flexibility in financing the purchase of movable assets, such as cars, boats, or household appliances.
The transfer of movable property under private international law is governed by legal operations or the actions of parties involved. The specific laws and procedures applicable to the transfer of movable property can vary, and consulting a legal expert is advisable to navigate the complexities and avoid potential issues.
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Security against loans
In India, movable property is defined as corporeal property of every description, except immovable property such as land and assets attached to it. This includes items like cars, iPhones, and other possessions that can be taken from one place to another. When it comes to security against loans, movable property can be used as collateral, providing security to the lender. This is known as a Loan Against Property (LAP).
A LAP is a valuable financial tool that allows individuals to acquire movable assets with ease. It offers several benefits, including lower interest rates, higher loan amounts, and flexible end-use options. The application process for a LAP is generally straightforward and can be done online through a lending institution's website or mobile app. Individuals can use a LAP to finance the purchase of movable assets, such as cars, boats, or household appliances, offering flexibility in how they use the funds.
One key advantage of taking a loan against movable property is the reduced documentation requirement, making it easier for borrowers to fulfil the necessary criteria. Additionally, movable properties are subject to certain restrictions, conditions, and taxes, such as the Central Sales Tax and the General Sales Tax under the respective acts. It is important to note that the Transfer of Property Act applies not only to immovable properties but also to movable assets.
When using movable property as security against a loan, there are several options available, including:
- Pledge: A pledge involves the bailment of goods as security for the payment of a debt or the performance of a promise. The goods are returned upon payment or fulfilment of the promise.
- Hypothecation: This is a charge created by a borrower in favour of a secured creditor without delivering possession of the movable property. It serves as security for financial assistance and can include floating or fixed charges on movable property.
- Lien: A lien can be particular or general. It allows a bailee of goods to retain them until due remuneration is received for services rendered. Bankers, factors, wharfingers, attorneys, and policy brokers are also conferred a general lien under the Contract Act.
- Mortgage: While typically associated with immovable property, a mortgage can also be created over movable property. This involves depositing title deeds with the lender or security trustee, intending to create a mortgage.
It is important to note that the creation of interests over movable property does not require compulsory registration under the Indian Registration Act, 1908. However, registration is preferred by the persons in whose favour such security interests are created. Additionally, charges created over the assets of Indian companies must be registered with the Registrar of Companies within 30 days, as per the Companies Act, 2013.
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Ownership transfer
In India, movable property is defined as corporeal property of any description that is not affixed to land. This includes standing timber, growing crops and grass, fruits on trees, and juice in trees. Movable property can be anything that is not fixed to the ground, irrespective of its quantity, quality, size, and shape. For example, a car or an iPhone.
Movable property can be transferred through gift, sale, exchange, lease, actionable claim, or mortgage. The Transfer of Property Act, 1882, establishes a legal framework for the transfer of immovable property, but it also applies to movable assets. The Act sets out eligibility criteria for individuals and entities intending to transfer property. To legally transfer property, the transferor must have valid ownership and the legal capacity to enter into a contract. Both parties involved in the transaction must be competent, meaning they must be of sound mind, above 18 years of age, and not disqualified by law. The transfer must be voluntary and lawful, involving a valid contract.
Under the Transfer of Property Act, property can be transferred by individuals, companies, or legal entities that are competent to enter contracts and have legal ownership. Section 42 of the Act allows for a transfer to become valid if the transferor acquires an interest in the property after initially lacking ownership.
In the case of inheritance, movable properties have easier transferability without any will, partition, gift deed, or simultaneous registration. When taking a loan against movable property, it is used as a pledge rather than a mortgage or lien.
The transfer of movable property under private international law is affected by legal operation or an act of parties. If a property is forbidden for transfer by law, possibility, morality, or public interest, it cannot be transferred.
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Historical origin of the term 'property'
The term 'property' has a broad history and has been defined in different ways by various philosophers and in different acts. The concept of property has evolved to include not just tangible things of value but also intangible rights and intellectual property.
In India, the evolution of property law began during the Mughal age with the instatement of the Zamindari System, which involved the king leasing land to zamindars who then gave it to farmers for cultivation and collected taxes. The British East India Company's land acquisition policies in the 18th century were met with rebellions by peasants, leading to the Indian National Congress advocating for land reforms in 1885. The subsequent "Independent India" government passed several land reform laws, including the Zamindari Abolition Act in 1956, which granted land ownership rights to farmers.
The Transfer of Property Act, 1881 (or 1882 according to some sources) is a significant legislation in the context of movable property. However, it lacks a clear definition of the term 'property'. While it defines 'immovable property', it does not explicitly define 'movable property', leading to initial confusion around the term.
The term 'property' is generally understood to refer to possessions, belongings, assets, liabilities, and creations. It encompasses a wide range of tangible and intangible things, including money, land, goods, rights, and interests. The concept of property is not limited to private rights but also extends to its role as a social institution, with its use governed by the rules of reason and the welfare of the community.
The historical development of property law in India includes acts such as the Partition Act of 1893, the Indian Succession Act of 1925, and the Hindu Succession Act of 1956, which address inheritance and succession rights. These laws, along with specific acts like the Indian Registration Act, 1908, and the General Sales Tax Act, shape the legal framework surrounding movable and immovable property in India.
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Frequently asked questions
Movable property is defined as any property that is not attached to the ground or land, irrespective of its quantity, shape, size, colour, or quality. This includes vehicles, electronic devices, jewellery, books, and timber.
Immovable property is any property with rights of ownership attached to it and cannot be moved. In contrast, movable property can be transferred through gift, sale, exchange, lease, actionable claim, or mortgage. Movable properties are also subject to different taxes and have easier transferability without any will, partition, gift deed, or simultaneous registration.
The specific classification of property as movable or immovable is important as there are differences in laws, substantive and procedural, applicable to the transfers of different properties. Misinterpretation and confusion can lead to problems with selling or litigation. In confusing situations, it is recommended to consult a legal expert.
