Capital Gain Account Scheme
Capital Gain Account Scheme was introduced in 1991.It scheme allows individual to park their capital gains until the point when they can be reinvested in assets specified in Sections 54 & 54F of the Income Tax Act, 1961, protecting their capital gains.
It allows us to make you eligible for the capital gains exemption you will receive once you reinvest & deposit the underutilized capital gains.
It allows individual to safeguard their long- term capital gains until they are able to invest it in a house before the due date for filling income tax return. However, the Capital Gain Account Scheme facility is not available in the rural branches of these banks.
Types of Capital Gain Account Scheme:
CGAS come into 2 categories:
- Savings
- Term Deposit
CGAS TYPE 1- Savings Account
A capital gains saving account is similar to the regular saving account in any bank. The amount deposited in this account will have high liquidity & can be withdrawn any time. You will receive a passbook that has records of all transactions – deposit, interest received, withdrawals- made in the account.
CGAS TYPE 2- Term Deposit Account
A capital gains term deposit account is similar to the fixed deposit schemes of bank. Its account also offers cumulative & non-cumulative options.
A non-cumulative scheme, on the other hand, allow you to withdraw or receive the interest at regular intervals- quarterly, half- quarterly, half yearly or annually.
In the cumulative option, the interest amount is added to reinvest & the term deposit, thereby adding to the total interest accrued.
Deposit in the capital gain account Scheme:
| Section No. | Capital gains made on | Category of taxpayer |
| 54 | Sale of a residential house | HUF or individual |
| 54B | Sale of land used for agriculture | HUF or individual |
| 54D | Compulsory acquisition of building and land | Any taxpayer |
| 54E | Sale of long-term capital assets | Any taxpayer |
| 54EC | Sale of long-term capital assets such as land or building or both | Any taxpayer |
| 54F | Sale of long-term capital asset that is not a residential building | HUF or individual |
| 54G | When shifting of an industrial facility from an urban area, the transfer of assets such as plant, building, land, machinery, or right in building or land | HUF or individual |
| 54GA | When shifting of an industrial facility from an urban area to a Special Economic Zone (SEZ), the transfer of assets such as plant, building, land, machinery, or right in building or land | HUF or individual |
| 54GB | Transference of residential property | HUF or individual |
Procedure to open capital gains account & manner of deposit:
- The deposit can be made in either in instalments and lump sum.
- Separate applications shall be made for availing exemption under different sections & separate CGA shall be opened.
- Documents such as proof or address, PAN, a photograph would be required.
- CGA can be opened by making an application in duplicate in Form A.
- Deposit can be made by any made such as cheque, cash, demand draft etc. In case of cheque or deposits or DD, date of deposit office subject to its realisation.
- Separate Application shall be made for availing exemption under different sections & separate capital gain accounts shall be opened.