Why A Multi-Crore Painting Makes Financial Sense To The Ultra-Rich

New Delhi:

When billionaire Cyrus Poonawalla recently bought a Raja Ravi Varma painting for Rs 167 crore, most people saw a headline about taste, legacy, and culture. Wealth managers saw something else.

They saw tax efficiency. Asset protection. Portfolio diversification. Estate planning. And a quiet way to move wealth across borders without moving anything at all. A painting, as per wealth managers, is not decor. It is a financial instrument.

Economics Of Buying Art

There is a little-known detail in the global art trade. Many ultra-wealthy collectors don’t hang such works in their living rooms. They store them in “freeports”, which are ultra-secure, tax-free warehouses in places like Geneva, Singapore, or Luxembourg.

As Suumit Arora, Founder & CEO, Artiure, explains, the artwork can sit in the same warehouse for years. It never technically enters a country. Yet, it can be sold multiple times. Ownership changes. Money changes hands. Taxes often don’t.

“The painting doesn’t move, but ownership changes and money moves tax free,” he says. These facilities also defer import duties and delay capital gains triggers. For someone thinking long-term, that is powerful.

‘Art Now A Capital Asset In India’

This is where the tax math becomes interesting. As CA Chandni Anandan, Tax Expert at ClearTax, points out, paintings and sculptures are classified as capital assets under Indian tax law.

Hold them for 24 months, and long-term capital gains are taxed at 12.5 per cent. This is much lower than many short-term instruments taxed at slab rates. “Art has evolved from a passion-driven purchase into a compelling form of patient capital for high-net worth individuals,” she notes.

There’s more. Gifting art to lineal heirs is tax-free. Thus, art becomes a silent store of value that can move across generations smoothly. Besides, donating valuable works to eligible institutions can unlock deductions based on appraised value. 

Not Volatile Like Markets

Wealthy investors don’t buy art because it behaves like stocks. They buy it because it doesn’t. Shubham Gupta, CFA and Co-founder, Growthvine Capital, says art’s value is driven by rarity, provenance, and the artist’s body of work; not GDP data or interest rates.

“Art starts to play the role of a differentiated, relatively uncorrelated asset,” he explains. It is illiquid. You cannot sell it in a click. It may take months, even years. But for investors who don’t need immediate liquidity, that patience becomes an advantage.

Cultural Capital

There is also a softer layer to this story. Mohini Sharma, Senior IPR Advocate at Jotwani Associates, believes art offers something markets cannot. “Unlike markets, masterpieces don’t panic; they endure.”

Art reflects personal identity. It signals cultural capital. It builds legacy. For many wealthy families, it becomes part of how they want to be remembered. Renu Khera, Founder of Galarie Nifa & National Institute of Fine Arts, says art is increasingly being seen alongside gold, real estate, and equities for diversification.

She highlights how credible galleries and advisors now guide buyers with research, authenticity checks, and provenance — making the market more structured and transparent than before.

Rise Of Indian Art Market

According to Anu Bajaj of Art Positive Gallery, New Delhi, Indian art has not yet become “overexposed” as an investment category, unlike some Western markets.

Modern masters and contemporary Indian artists have seen strong global interest in the last five years. Investors can enjoy the work for 5-10 years and often exit at a higher value.

This combination of aesthetic enjoyment plus capital appreciation is rare in the investment world.

An Expression Of Wealth

Interestingly, the decision is not always purely financial. Sidhharrth S Kumaar, Chief Astrologer & Life Coach at NumroVani, says he has seen a 30-32 per cent rise in queries around acquiring art — what to buy, where to place it, what suits the buyer.

“It is no longer just a purchase. It sits between psychology and energy,” he says. For many, art becomes a way of expressing wealth without speaking about it directly.