How to treat unutilised capital gain account scheme amount

@ Poorna Chandra KJ

If 2 years are already completed since opening of the Capital Gains Account, then the CG account has to be closed and unutilized amount to be credited back into your savings account. And capital gains tax to be paid on the unutilized amount.

Contact your bank for the process to be followed for closing the CG account.

The Unutilized amount would be treated as Capital Gains in Current FY, and would have to be reported in ITR next AY

If the amount was deposited in the Capital Gains Account Scheme (CGAS) in FY 2023-24 and was not used within the applicable period, the unutilised amount is generally taxable as capital gain in the year that period expires—not merely because it was withdrawn. For a deposit linked to a Section 54/54F claim, the usual deadline is three years from the date of transfer; for Section 54B, it is two years. The gain is generally treated as long-term or short-term by reference to the original asset and transfer.

If the relevant period expired in FY 2024-25, include the unutilised amount in the return for AY 2025-26, under the applicable capital-gains head. If it did not expire in that year, a premature withdrawal by itself does not ordinarily trigger this deemed-capital-gain rule, though the withdrawal and any actual use should be checked against the applicable section and CGAS conditions. The transfer date, section claimed, and amount actually utilised determine the precise treatment.

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Unutilised CGAS deposit withdrawn without investing:

• If the deposit isn't used for the new house within the period (2 years for purchase, 3 years for construction from the sale), the unutilised amount is taxed as LTCG in the year the period expires (Sec 54(2)), not in the year of withdrawal.

• Closing the account before using it needs the AO's approval (Form G); amounts withdrawn without utilisation are taxed as above.