Capital Gains Account Scheme (CGAS) — Park Gains Before Reinvestment
Updated: 3 June 2026 | Income-tax Act 2025 | Section 54, 54B, 54F Exemptions
CGAS: If you sold property/gold/shares and earned capital gains but cannot reinvest in a new house by ITR filing date (July 31), deposit the unspent amount in a CGAS bank account before July 31. This preserves your tax exemption. Type A (savings-style) or Type B (FD). Interest is taxable. Unused funds → exemption revoked.
July 31
Deposit unspent capital gains in CGAS before July 31 ITR due date — mandatory to preserve 54/54F exemption.
Available at all nationalised banks. Form A for opening. Section 54: 2 years to buy, 3 years to build — use CGAS funds within this period.
Available at all nationalised banks. Form A for opening. Section 54: 2 years to buy, 3 years to build — use CGAS funds within this period.
CGAS — Which Exemption Sections Allow It
| Section | Asset Sold | Investment in | Time to Invest | CGAS Deposit Deadline |
|---|---|---|---|---|
| 54 | Residential house | New residential house | 2 yr buy / 3 yr build | Before ITR due date (July 31) |
| 54B | Agricultural land | New agricultural land | 2 years | Before ITR due date |
| 54F | Any asset (not house) | Residential house | 2 yr buy / 3 yr build | Before ITR due date |
| 54D | Industrial land/building (compulsory acquisition) | New industrial land/building | 3 years | Before ITR due date |
| 54G/54GA | Industrial undertaking (shifting) | New plant, machinery, land | 3 years | Before ITR due date |
Frequently Asked Questions
What is the Capital Gains Account Scheme (CGAS) and when should you use it?
CGAS (Capital Gains Account Scheme, 1988) allows taxpayers to park capital gains in a designated bank account before claiming an exemption under Sections 54, 54B, 54D, 54F, 54G, 54GA, or 54GB — when the new asset (house, land, bonds) has not been purchased or constructed by the ITR filing date (usually July 31). If you sold an asset and earned capital gains but cannot complete the reinvestment by July 31, you MUST deposit the unutilised amount in CGAS before that date to preserve your exemption claim. Without the CGAS deposit, the unspent capital gains become taxable in that year even if you later reinvest.
What are the two types of CGAS accounts — Type A and Type B?
CGAS Account Type A (Savings Account): Functions like a regular savings account; money can be deposited and withdrawn as needed for construction/purchase; lower interest rate (~4%); suitable when multiple withdrawals will be needed for under-construction property. Type B (Term Deposit / FD): Fixed deposit style; higher interest rate; must specify the term; cannot withdraw before maturity for general purposes — must first convert to Type A. Interest on both types is TAXABLE as income from other sources. Recommended strategy: Start with Type A if making multiple payments to builder; use Type B if buying a ready property and a single payment needed at a future date.
By when must the CGAS deposit be made and how long can funds stay?
Deposit deadline: Before the due date for filing ITR under the Income-tax Act 2025 — typically July 31 of the assessment year. Utilization period: Must use CGAS funds within the time permitted by the relevant exemption section: Section 54/54F: 2 years for purchase, 3 years for construction. Section 54B: 2 years for purchase. Section 54EC: 6 months (bonds — CGAS rarely needed here). Section 54G: 3 years for purchase/construction in industrial area. If funds not used within the utilization period: the exemption claimed is revoked; the unutilised capital gains become taxable in the year the time period expired, along with interest/penalty.
Which banks offer CGAS accounts and what documents are required?
Banks that offer CGAS: All nationalised banks and specified scheduled banks — SBI, PNB, Bank of Baroda, Canara Bank, HDFC Bank, ICICI Bank, Axis Bank, and most major banks. Post offices: NOT eligible for CGAS. Documents to open CGAS account: PAN, Aadhaar, address proof, passport-size photos, and importantly — the ITR filing (not mandatory for opening but needed to maintain). Application form: Form A for opening the account (available at the bank branch). Declare the purpose: specify which section (54, 54F, etc.) the deposit relates to, asset sold, date of sale, capital gain amount. The account cannot be used for non-CGAS purposes (pledging, joint holding generally not permitted).
How to withdraw money from CGAS and what happens if it is not used?
Withdrawal from CGAS: Form C to apply for withdrawal from Type A or to convert Type B to Type A. Each withdrawal requires declaration of how the funds will be used (construction milestone, purchase instalment). For withdrawals above a certain amount (₹25,000 or as specified), prior approval from Assessing Officer may be required — check with your bank. Closure of CGAS: Once house is purchased/completed, close the account with Form G — submit to the bank. If CGAS not used within allowed time: File a return for the year the time period expired; declare the unutilised capital gains as taxable income; pay tax + interest on underpayment (Section 234A/B/C if advance tax not paid). Loss of exemption is the consequence — not a penalty per se, but tax + interest becomes due.
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