The Ministry of Finance has issued the Capital Gains Accounts (Second Amendment) Scheme, 2025, widening the list of banks authorised to handle CGAS deposits.
Capital Gains Account Scheme (CGAS), 1988
- Introduced in 1988 to allow taxpayers to temporarily park long-term capital gains when they cannot reinvest them immediately.
- Enables individuals to claim exemptions under Sections 54, 54F, and similar provisions of the Income Tax Act.
Why the Scheme Exists
- Long-term capital gains must be reinvested within specific timelines (up to 3 years) to avoid tax liability.
- When the Income Tax Return (ITR) due date arrives before reinvestment is completed, CGAS acts as a temporary holding account.
Eligibility
- Any taxpayer earning long-term capital gains—Individuals, HUFs, Companies, Trusts, and others—can use CGAS.
- Short-term capital gains are not eligible for this scheme.
Key Conditions
- Deposits must be made before filing the ITR.
- Money kept in CGAS must be utilised within the permitted reinvestment period; otherwise, it becomes taxable in the year the deadline lapses.
- The amount deposited is treated the same as direct investment for exemption purposes.
Capital Gains Accounts (Second Amendment) Scheme, 2025
- Earlier, CGAS deposits were restricted mainly to public sector banks.
- The amendment now authorises 19 private sector banks (non-rural branches) to accept and manage CGAS accounts.
- “Non-rural branches” refers to locations with a population of 10,000+ (2011 Census).
- The scheme now clearly recognises electronic modes of deposit such as UPI, IMPS, NEFT, RTGS, net banking, debit/credit cards, BHIM/Aadhaar Pay etc.
- This expansion aims to improve accessibility, reduce delays, and make the compliance process more convenient for taxpayers.
Conclusion
The updated CGAS rules broaden access and simplify deposits, making it easier for taxpayers to secure capital gains exemptions on time. Overall, the reforms strengthen transparency, convenience, and compliance in capital gains reinvestment.
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