Capital Gains Account Scheme

The profit arising from the sale of any property (capital asset) referred to as Capital Gain is chargeable to tax as Capital Gains. However, Income Tax Act provides for various schemes for saving tax on such capital gains under Section 54, 54B, 54D, 54F etc.

However, as per the provisions of the above said sections, the amount is required to be reinvested in specified asset types within a specified time period. If the due date of filing income tax returns falls before the expiry of the above said time period, the amount of capital gains is required to be parked temporarily in the Capital Gains Account Scheme, which can be further withdrawn at the time of investment in the specified instrument.

The taxpayer should deposit the amount of capital gains in the capital gains account scheme on or before the due date of filing of income tax returns. The account can be opened with any of the branches of the banks listed below except the rural branches:

  • State Bank of India
  • State Bank of Bikaner & Jaipur
  • State Bank of Hyderabad
  • State Bank of Indore
  • State Bank of Mysore
  • State Bank of Patiala
  • State Bank of Saurashtra
  • State Bank of Travancore
  • Central Bank of India
  • Bank of India
  • Punjab National Bank
  • Bank of Baroda
  • UCO Bank
  • Canara Bank
  • United Bank of India
  • Dena Bank
  • Syndicate Bank
  • Union Bank of India
  • Allahabad Bank
  • Indian Bank
  • Bank of Maharashtra
  • Indian Overseas Bank
  • Andhra Bank
  • Corporation Bank
  • New Bank of India
  • Oriental Bank of Commerce
  • Punjab & Sind Bank
  • Vijaya Bank

There are 2 categories of Capital Gains Account which are as follows:

Capital Gains Account – Type A – Savings Account: This is like a normal savings account and the interest payable on this account is the same as the interest paid on normal savings account by that bank. This type of accounts are advised when the amount of capital gains is to be used for construction of a house, as the amount would be required to be withdrawn in various stages.

Capital Gains Account -Type B – Term Deposit Account: This is like a fixed deposit wherein the amount is deposited for a fixed period of time. The interest rate on this account is equivalent to the interest paid on fixed deposits by the bank. This type of account is advised when the amount of capital gains is to be utilized for purchase of a house.

 Withdrawal from Capital Gains Account Scheme:

The amount deposited in the Capital Gains Account can be withdrawn by making an application to the branch manager in prescribed format Form C, for withdrawal from an account for the first time.

The amount so withdrawn has to be utilized for specified investment within 60 days from the date of such withdrawal and any unutilised amount may be re-deposited to Type A account immediately.

Download Form C

For subsequent withdrawal, the application is required to be made to the branch manager in Form D by detailing the manner/purpose for which the previous withdrawal has been utilized.

Download Form D

To close the Capital Gains Account, an application in Form G is required to be made. Such closure requires the approval of the income tax officer who has the jurisdiction of the depositor.

Download Form G