Deposit under Capital Gain Saving Scheme for Claiming exemption from Capital Gain Tax

DEPOSIT UNDER CAPITAL GAINS ACCOUNTS SCHEME, 1988

There is some exemption given in U/s 54, 54B, 54D, 54F, 54G, 54GA or 54GB of the Income-tax Act, 1961. To avail such exemption the assessee is required to invest the sale consideration within specified period as mentioned in those section. In most of cases, the time period for the investment is beyond the due date for filing of Income Tax Return and there the Government had given an option to park such uninvested money in a particular account which is specified as CAPITAL GAIN SAVING SCHEME (CGSS).

CGSS is applicable on all the eligible assesses.

Eligible Assessee

Following assesees are eligible to deposit under Capital Gain Saving Scheme 1988 and claim exemption from payment of capital gain tax:

Section	Capital Gain on	Eligible assessee
54	Sale of Residential Property (LTCG)	Individual or Hindu Undivided Family (HUF)
54B	Sale of Land Used for agricultural Purpose	Individual or HUF
54D	Compulsory acquisition of lands and buildings forming part of Industrial undertaking	Any assessee
54F	Sale of capital assets other than Residential Property (LTCG)	Individual or HUF
54G	Transfer of assets being Plant, machinery, land or building or right in land or building on shifting of Industrial undertaking from urban area	Any assessee
54GA	Transfer of assets being Plant, machinery, land or building or right in land or building on shifting of Industrial undertaking from urban area to Special Economic Zone (SEZ)	Any assessee
54GB	Sale of Residential Property (a house or a plot of land) (LTCG)	Any assessee

When to Invest in CGSS?

Where assessee could not spend the amount as specified under different sections, such  eligible assessee is required to deposit in CGSS account on or before the due date for filing of income tax return specified for such assessee.

Where to Deposit the amount?

The amount can be deposited in any branch of nationalized banks. 

Type of Account

There are two type of account which can be opened under CGSS. They can be either Type A (Saving Deposit) or Type B (Term Deposit (Cumulative or Non-Cumulative) Account).

Type A account can be converted in Type B account and vice versa. However such transfer will be regarded as premature withdrawal if done before maturity of time period. Form B can be used for transfer from Type A to Type B account or vice versa.

Accounts can be transferred from one branch to another branch of a particular deposit bank however it can not be transferred to different deposit bank.

Interest

Type A: Saving Deposit Account

Interest rate is fixed by Reserve Bank of India and will be calculated on minimum monthly balance (between the close of the 10th day and the end of the month) in the account and will be credited in account half yearly.

Type B: Term Deposit (Cumulative or Non-Cumulative) Account

Interest rate is fixed by Reserve Bank of India. In case of cumulative deposit in account-B, the amount of interest accrued will be deemed to have been reinvested and in case of non-cumulative deposit in account-B, the amount of interest will become due and payable at quarterly intervals.

Nomination

Nomination can be made by depositor in Form E. Nomination can be made upto three (3) persons who can receive the balance amount in capital Gain saving accounts in case of his death. Nomination can be changed anytime by submitting fresh nomination in Form F.

No nomination can be made in case account is opened in the name of Minor, HUF, BOI or AOP. However nomination can be made in the name of Minor.

Withdrawal from the account

Type A: Saving Deposit Account

Withdrawals under this account can be made from time to time by the depositor. Depositor shall have to apply in Form C together with passbook of account in case of initial withdrawal and in case of subsequent withdrawal, Form D (in duplicate) along-with details of utilization of previous withdrawals.

Type B: Term Deposit (Cumulative or Non-Cumulative) Account

Withdrawals under this account can be made only after the expiry of the period for which the deposit under this account has been made and accepted. Premature withdrawal can be done by opening and transferring the amount in Type A saving deposit account.

The amount withdrawn shall be utilized within 60 days from the date of withdrawal for the purpose specified in the particular section under which exemption was claimed and where the amount is not utilized within that period, it shall be deposited in Type A account immediately thereafter.

Charge or Alienation of Capital Gain Saving Scheme Account

The amount deposited/standing to the credit in Capital Gain Saving Scheme Account can not be offered as security for any loan or guarantee and shall not be charged or alienated in any manner whatsoever.

Closure of Capital Gain Saving Scheme Account

The Capital Gain Saving Scheme Account can be closed with the approval of Assessing Officer. The depositor has to make application in Form G.

Where application for closure is made by Nominee or legal heir of deceased depositor, Form H is to used.