Doubts on Capital Gains Account Scheme / FD (CGAS)

To address your doubts on the Capital Gains Account Scheme (CGAS), I'll provide you with the necessary information.

Depositing Funds You can deposit funds directly into the CGAS account or first deposit them into a regular savings account and then transfer them to the CGAS account.¹

However, it's essential to ensure that the funds are deposited into the CGAS account before the due date of filing your income tax return for the financial year in which the capital gains arise [5).

Deposit Time Frame You need to deposit the funds before the due date of filing your income tax return for the financial year in which the capital gains arise.

 This is typically before the financial year-end. Lock-in Period There is no specific lock-in period for CGAS accounts.

xHowever, the funds deposited in a CGAS account must be utilized for the specified purpose (e.g., purchasing a residential property) within a specified time frame (typically two years for purchasing and three years for constructing a residential property).

If  funds are not utilized within this time frame, they will be treated as capital gains in the year in which the time limit expires.

 Interest Rates The interest rates for CGAS accounts are similar to those for regular fixed deposits (FDs).

However, the interest income earned on CGAS deposits is taxable. Withdrawal Withdrawals from a CGAS account can only be made for the specified purpose (e.g., purchasing a residential property).

You may need to obtain permission from the Assessing Officer (AO) for withdrawals.

Additionally, you'll need to get permission from the AO for closing the account. Account Maintenance The CGAS account should be maintained under the same person's name, and the amount should be deposited and utilized by the same person.

However, it's possible to purchase a residential property in the name of other family members, but this may have tax implications.

Additional Tips - Ensure you deposit the funds into the CGAS account before the due date of filing your income tax return. -

 Keep track of the interest income earned on your CGAS deposits, as it's taxable.

If reinvestment cannot be completed before the ITR filing date, deposit the unutilised capital gains in a CGAS account at a scheduled bank before filing to preserve your Section 54 or 54F claim. CGAS has two sub-accounts: Type-A (savings) for short-term parking and Type-B (term deposit) for amounts earmarked for construction or purchase. Interest earned on both accounts is taxable. If the reinvestment window lapses (2 years for purchase, 3 years for construction under Section 54), the unspent balance in CGAS becomes taxable as capital gains in that year. The [capital gains tax and exemption guide for AY 2026-27](https://taxgarden.in/blog/capital-gains-tax-india-ltcg-stcg-ay-2026-27) covers CGAS alongside Section 54, 54F, and 54EC options.