The Capital Gains Account Scheme has undergone a major upgrade as the Finance Ministry introduces wider banking access, digital payment recognition and clearer operational rules. These changes came into effect on November 19 through two separate notifications.
The first notification allows nineteen private banks, including ICICI Bank and HDFC Bank, to offer the Capital Gains Account facility. The second notification updates the rules for acceptable payment modes and expands the definition of eligible proceeds. The scheme supports taxpayers who want to claim exemptions from long term capital gains tax by reinvesting their gains within the permitted time frame. It allows them to temporarily park their proceeds until reinvestment, which is treated the same as direct investment for exemption. The scheme does not apply to short term capital gains.
According to Amit Maheshwari, Tax Partner at AKM Global, the updated rules now include Section 54GA of the Income Tax Act. This covers industrial units shifting from urban areas to special economic zones. He said that all digital modes such as UPI, IMPS, NEFT and credit cards are now valid for deposits. “From April 1 2027, closures of CGAS accounts will move to a completely electronic system with digital signatures or EVC. Overall, these changes will facilitate a shift from a paper driven cheque based process to a streamlined technology enabled framework for availing capital gains exemption,” he said.
Lakshmi Sankar, Executive Director at a consulting group, welcomed the clarity on the effective date of payments. Deposits made through cheque, demand draft or electronic transfer will be considered from the date the bank receives the payment, subject to successful realisation. “Electronic statement of account now holds significance similar to a pass book. Form 15G and Form 15H can also be furnished electronically for lesser or nil deduction of TDS on the interest portion of the deposit made,” he said.
Under the scheme, two types of deposit accounts are available. Account A functions like a savings deposit with flexible withdrawals and interest credited at the applicable savings rate. Account B is offered as a term deposit with cumulative or non cumulative options. Withdrawals are allowed only after the deposit matures.
The account can be opened with a minimum of one thousand rupees and later in multiples of one rupee, with no upper limit. The maximum period ranges between two and three years from the date of asset transfer. The minimum maturity for income based options is six months, while the minimum for maturity based deposits is seven days. After the selected period ends, the term deposit closes automatically.
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