Capital gain account schemes (CGAS) Holder died before building residence property, she purchased plot this year but didn't start work. Property sold on March 2025.
Now the legal heirs have to open CGAS account & continue building residential property?
Or
Have to pay CG tax?
Please mention methods available to avoid CG tax, we are in process of building home..
Thanks
In my view, the legal heirs are not required to open a fresh CGAS account and continue construction merely to preserve the exemption claimed by the deceased. On the death of the assessee, the unutilized CGAS balance forms part of the estate and can be claimed by the legal heirs. The exemption already allowed to the deceased is generally not withdrawn, and the unutilized balance is ordinarily not taxable in the hands of either the deceased or the legal heirs, subject to the facts of the case and relevant judicial precedents.
In case of the demise of the CGAS account holder, the nominee/legal heir can make a claim for closure of the account and obtain the balance amount standing to the credit in CGAS. This application for closure is typically to be made in Form H along with the death certificate, passbook/deposit receipt, KYC documents and other necessary documents prescribed by the bank. Where there is no nomination, the legal heir is usually required to obtain the legal heir certificate/succession documents and disclaimer certificates of other legal heirs (if any).
From an income-tax point of view, the balance unutilized funds lying in the CGAS account on the death of the depositor are not treated as income and are not liable to tax in the hands of the legal heir simply because the latter receives the amount. The CBDT has ruled that it forms part of the estate that is transferred to the legal heirs and is not an income.
However, if any interest continues to be earned by the bank on the balance funds in the account after the death of the depositor, then interest income may be taxed in the hands of the legal heir(s). The CBDT has also ruled that tax deduction at source on the interest credited after the depositor's death should be linked to the PAN of the legal heir rather than thePAN of the deceased depositor.
Could you please let us know if a nominee is registered in CGAS account and also the name of the bank so that appropriate procedure and documents required may be specified.
Yes, Nominee added, Indian Bank CGAS...
CAclubindia
