Recent Amendments to Capital Gains Account Scheme (CGAS) - Notifications No. 161/2025 & 162/2025

1. Background

The Capital Gains Account Scheme, 1988 (CGAS) is a scheme created by the Central Government to help taxpayers who want to claim an exemption from capital gains tax but could not immediately invest their capital gains in specified assets within the stipulated period. Enhancing convenience for taxpayers, the Central Board of Direct Taxes (CBDT) issued two notifications, Notification No. 161/2025 and Notification No. 162/2025, both dated 19 November 2025, to make significant changes to the Scheme.

2. Purpose of the Capital Gains Account Scheme (CGAS), 1988

CGAS was introduced through a government notification pursuant to Section 54(2), Section 54B(2), Section 54D(2), Section 54F(4), Section 54G(2), and Section 54GB(2) of the Income-tax Act, 1961. These sections stipulate that if capital gains are not utilized for the specified purposes before the due date for filing the income tax return, the unutilized amount must be deposited in a CGAS account to remain eligible for exemption. For detailed provisions, refer to the income tax requirements.

3. Capital Gains Sections requiring CGAS Deposit

Below is a summary of key sections that require taxpayers to deposit unutilized gains in CGAS:

3.1 Section 54 – Residential House (Individual / HUF)

This applies when long-term capital gain arises from the sale of a residential house and is invested in another residential property.

3.2 Section 54B – Agricultural Land

Individuals/HUFs can claim exemption when selling urban agricultural land and buying new agricultural land. Learn more about types of exemptions such as Section 80C deductions.

3.3 Section 54D – Compulsory Acquisition of Industrial Land/Building

3.4 Section 54F – Residential House (Investment out of Net Sale Consideration)

This applies to individuals/HUFs investing net consideration from long-term assets (other than a residential house) into residential property.

3.5 Section 54G – Shifting of Industrial Undertaking from Urban Area

3.6 Section 54GA – Shifting of Industrial Undertaking to SEZ

3.7 Section 54GB – Investment in Eligible Start-up (for Individuals/HUFs)

4. Types of Accounts Under CGAS

4.1 Account Type A – Savings Account

A standard savings account with restrictions on withdrawal, which can align with income tax surcharges.

4.2 Account Type B – Term Deposit Account

A fixed deposit with a maturity period matching the proposed investment schedule. Withdrawals require submission of Form C, D, or E, depending on the situation.

5. Amendments under Notification No. 161/2025 dated 19.11.2025

5.1 Inclusion of Section 54GA under CGAS

Taxpayers can now deposit unutilized capital gains from transactions under Section 54GA (Shifting of industrial undertaking to SEZ) into CGAS and claim an exemption. Explore the process for claiming exemptions.

Impact of Amendment:

• Beneficial for industrial undertakings moving to SEZs

• Ensures equality across capital-gain exemptions

5.2 Introduction of “Electronic Mode” for Deposits

Previously, methods of deposit were limited to:

• Cash
• Crossed cheque
• Demand draft

Now, electronic payment systems are recognized, including:

• Credit Card
• Debit Card
• Net Banking
• IMPS
• UPI
• RTGS
• NEFT
• BHIM Aadhaar Pay

This brings CGAS in line with modern digital banking practices and improves accessibility. Explore more on digital banking integration.

5.3 Mandatory Online Account Closure

Effective from 1st April 2027, all account closure applications must be submitted electronically, supported by a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). This reduces the need for physical branch visits.

5.4 Expanded Definition of “Deposit Office”

Previously, only certain public-sector banks were authorized. The term "Deposit Office" now includes any banking company that:

• Accepts deposits
• Maintains CGAS accounts

This expansion leads to an increase in the availability of banks.

6. Amendments Under Notification No. 162/2025 dated 19.11.2025

CBDT has authorized 19 additional private-sector and other banks to handle CGAS accounts. The list of such banks are given below:

• HDFC Bank Ltd
• ICICI Bank Ltd
• Axis Bank Ltd
• City Union Bank Ltd
• DCB Bank Ltd
• Federal Bank Ltd
• IDFC FIRST Bank Ltd
• IndusInd Bank Ltd
• Jammu and Kashmir Bank Ltd
• Karnataka Bank Ltd
• Karur Vysya Bank Ltd
• Kotak Mahindra Bank Ltd
• RBL Bank Ltd
• South Indian Bank Ltd
• Yes Bank Ltd
• Dhanlaxmi Bank Ltd
• Bandhan Bank Ltd
• CSB Bank Ltd
• Tamilnad Mercantile Bank Ltd

Impact of Amendment:

• Improved nationwide access, especially in urban and semi-urban areas

• Reduced reliance solely on PSU banks

7. Practical Implications for Taxpayers

7.1 Improved Flexibility

Depositors can now use top private-sector banks and digital methods for making deposits.

For broader options in tax filing see more on Section 80D.

7.2 Reduced Burden in Compliance

Digitalization of closure requests improves convenience and cuts down on manual paperwork. Understand more about the digital processes involved.

7.3 Increased Options for Industrial Undertakings

Section 54GA now benefits from CGAS, solving long-standing practical issues.

8. Key Points to be Observed for Better Compliance

• Deposit unutilized capital gain before the due date for filing under Section 139(1)

• Submit proof of deposit in CGAS along with the income tax return

• Withdrawals must be used only for the purpose specified under the relevant section

• Unutilized balance becomes taxable in the year when the conditions related to exemption fail

• From 1st April 2027, Closure of the CGAS account must be done online

9. Summary

By expanding the CGAS Scheme to Section 54GA, allowing electronic deposit methods, adding new authorized banks and requiring digital closure, CBDT has modernized a key system for capital gains tax planning, apart from providing convenience to Taxpayers. For further assistance, consult our professionals. This comprehensive update highlights the significance of modern banking in tax compliance and management.