Capital Gain Account Scheme details which you need to know

December 3, 20150 Comments

Details and updates about Capital Gain Account Scheme:

What is Capital Gains Account Scheme?

  • Under Section 54 of the Income Tax Act provides exemption from tax on long-term capital gains arising out of sale of house if the gains are invested in purchase of another house either a year before or within two years from date of transfer, or used for construction of a house within three years of date of transfer.
  • It may be difficult to arrive at a purchase or construction decision before filing the tax return for the year in which the sale took place. However, the assessee can avail exemption by depositing the capital gain in an account opened under the Capital Gain Account Scheme (CGAS).

capital gain account scheme

How to open Account?

  • If you want to open an account of CGAS then it will be opened only by an authorised/approved [email protected] k branch. The rural branches of [email protected] k are exclude. you have to fill up the forms and follow the procedures according to instructions.

What documents are necessary and types of accounts? 

  • To open an account needs necessary documents are copy of PAN card, ID proof, Address proof and photograph which is require to submit along with the form.
  • There are two types of accounts can be open one is  CGAS savings account (Account A) or CGAS term deposit (Account B). The deposit period is 3 years from date of transfer of original asset. you have to fill the required details needs to be mentioned in the form.

The payment method is the entire capital gain must be deposited to the CGAS account from transfer of the property options by cash, cheque or draft.

Filing Income tax return:

During which the transfer was made, the proof of deposit into the CGAS account should be attached along with income tax return to claim exemption from long term capital gain tax for the financial year.

How to do withdrawal of funds:

The construction of house or purchase of house funds can be withdrawn from CGAS account. you need to give application and mentioning the purpose to be submit accordingly. The Funds from Account B can also be withdrawn but have to be first transferred to Account A. Account B can be closed at maturity and proceeds transferred to Account A. While closing Account A, assessee is required to produce an authority letter or certificate from the income tax authorities.

Points to take into consideration:

1. No loan facility is allowed on the CGAS account.

2. Funds withdrawn from CGAS account need to be utilised within 2 months.

3. Interest earned on CGAS deposit is taxable in the hands of the assessee.

We hope you got enough information after reading this article know about CGAS Capital Gain Account Scheme in details. 

Filed in: Income Tax
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