:: Capital Gains Account Scheme

The Capital Gains Account Scheme (CGAS) defers capital gains tax liabilities on asset sales like property, allowing taxpayers to park gains in specified accounts. Here’s how one can open an account.Who can open an account?
The taxpayer should have capital gains from the sale or transfer of assets specified in Sections 54 to 54GB. The CGAS scheme is applicable only to Indian residents. NRIs have to open a non-resident CGAS account. One must furnish proof of capital gains from the sale of assets.

How to open an account
To open a capital gains account, visit authorised bank branches, fill out forms, and provide PAN card, address proof, and asset sale details.

Types of accounts

There are two types of deposits that individuals can avail of under the CGAS:
Type A: This works like a savings account, pays you an interest similar to that of a savings account. It offers liquidity, making it easy to withdraw it at any time.
Type B: This works like a fixed deposit or a term deposit, with similar interest rates. This type of account can be held for a maximum of three years.Making deposits
After opening the account, deposit the capital gains within the set time frame for tax benefits, ensuring it doesn’t exceed the gains from the asset sale.

Utilising funds
Taxpayers can withdraw funds from their CGAS account for the purpose of reinvestment in eligible assets to claim tax exemptions. The withdrawn amount must be utilised within the specified time frame as per the provisions of Section 54 or Section 54F of the Income-tax Act.

Taxpayers should adhere to CGAS requirements, maintain documentation, and monitor fund withdrawals to ensure smooth transactions, avoiding penalties or tax issues.

Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.

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