What Is the Capital Gains Account Scheme?
The Capital Gains Account Scheme (CGAS) can allow an eligible taxpayer to deposit unutilised capital gains when the amount intended for a qualifying exemption has not been used by the applicable return-filing date.
Quick Answer
Where the conditions of a capital-gains exemption permit CGAS and the taxpayer has not yet utilised the amount for the qualifying new asset, the prescribed deposit can preserve the exemption subject to the relevant conditions and later utilisation deadline.
Why Is CGAS Used?
Capital-gains exemption provisions can require the taxpayer to purchase or construct a qualifying new asset within specified periods. CGAS can be relevant where the amount has not yet been utilised by the return-filing deadline.
Which Exemptions Can Involve CGAS?
The scheme can be relevant to specified exemptions such as sections 54, 54B and 54F, subject to the conditions of each provision. It should not be assumed that every capital-gains exemption automatically permits CGAS.
What Happens After Deposit?
The amount must be utilised for the qualifying purpose within the period prescribed for the relevant exemption. An unutilised amount can have tax consequences when the permitted period expires.
What About Deposits Made Before 1 April 2026?
The Income Tax Department's transition FAQ states that amounts deposited in CGAS under the Income Tax Act, 1961 before 1 April 2026 continue to be governed by the old Act's conditions. If the prescribed period expires after the new Act begins, the transition rule determines the year of taxation while the earlier exemption conditions continue to govern the amount.
Practical Checklist
- Check that the relevant exemption permits CGAS.
- Deposit before the applicable return-filing deadline.
- Track utilisation against the exemption's permitted period.
- Keep the CGAS account and deposit certificates with the ITR records.
Related Capital Gains Questions
- What Is Capital Gain in Income Tax?
- What Is Short-Term and Long-Term Capital Gain?
- What Is Cost of Acquisition for Capital Gains?
- Which ITR Form Should I Use for Capital Gains?
