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Before discussing the concept of Capital Gain Account Scheme let us know who are eligible for claiming exemption & when the exemption can be claimed from capital gain computed u/s 48 of income tax act 1961.

  • Who are eligible: For claiming exemption u/s 54,54B,54F,54GB the assessee should be either INDIVIDUAL or HUF & u/s 54D,54E/EA/EB/EC/ED/EE,54G,54GA exemption can be claimed by any assessee.
  • When exemption can be claimed: Exemption u/s 54,54F,54GB,54E/EA/EB/EC/ED/EE can be claimed only if capital gain is LONG TERM& exemption u/s 54B,54D,54G,54GA can be claimed whether capital gain is SHORT TERM or LONG TERM.

Complete Guidance on CGAS:

  • Capital gain that is proposed to be utilised as mentioned u/s 54/54B/54D/54G/54GB & Net consideration that is proposed to be utilised as mentioned u/s 54F is not utilised on or before due date of filing of return of income then it should be deposited in CGAS in order to claim exemption.
  • Account can only be opened with 28 Specified banks notified by Government by submitting Form-A along with proof of PAN & Aadhaar.
  • Amount can be deposited either in Account-A (Term Deposit) or Account-B (Fixed deposit). In case assessee intends to utilise after fixed period of time then it is beneficial to deposit in Account B. If assessee intends to use amount for construction, then it is beneficial to deposit in Account A as he regularly needs to withdraw the amount. Assessee can also deposit portion of amount in Account A & portion of amount in Account B. No facility of opening Joint account.
  •  Deposit can be made only by way of Cash or Account transfer (Only Branch Transfers) as there is no cheque book facility & RTGS/NEFT facility to this type of account. No Amount can be transferred to/from this account through RTGS/NEFT as the main motive of Income tax department is every transaction to be happened in hands of bank. The only proof that is available is Pass Book & no ATM facility is available.
  • If assesse intends to convert from Account A to Account B (or) Account B to Account A then he should submit Form-B.
  • In case assessee deposited in Account B & he wish to withdraw the amount, then it is possible only by transferring the amount to Account A. Withdraw from Account B is not possible.
  • Form-C to be submitted in order to withdraw the amount from this account. As we discussed earlier there is no cheque book/RTGS/NEFT facility amount can be utilised by withdrawing Cash (up to 25,000 per day) or by issuing Demand draft in the name of party to whom payment is to be made.
  • From the time assesse withdraw (subsequent to first withdrawal), along with form c he should fill Form-D in duplicate specifying the purpose for which amount that was previously withdrawn is utilised. Assessee needs to maintain one copy of Form-D that was signed by appropriate person in bank.
  • If assesse wish to nominate any person, he should submit Form-E. In case assessee wish to cancel or change the nomination previously made he should submit Form-F.
  • Interest on deposit is taxable under head Other Sources in hands of assessee. However TDS is deducted by bank at time of credit.
  • In case assesse desire to close the account, an application Form-G shall be submitted with approval of assessing officer who has jurisdiction over depositor.
  • In case assesse nominates any person then nominee or else legal heir of assessee shall submit Form-H for closure of account in case assessee is deceased.


Published by

Sai Teja Pachipulusu
(Chartered Accountant)
Category Income Tax   Report

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