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Home Income Tax Capital Gain Save your Capital Gains through Capital Gains Accounts Scheme

Save your Capital Gains through Capital Gains Accounts Scheme

capital gains accounts scheme

All assesses who are eligible for exemption u/s 54, u/s 54B, u/s 54D, u/s 54F, u/s 54G, or u/s 54GB of the Income Tax 1961, can avail the option of Capital Gains Accounts Scheme 1988 to safeguard their Capital Gain.

Key highlights of Capital Gains Accounts Scheme 1988

Account – ASavings Deposit – Subject to the other provisions of this scheme.

Depositor can withdraw amount any time.
Account – BTerm Deposit – Cumulative or non-cumulative deposit (optional)

Withdrawals from this deposit account can be made only after the expiry of the period for which the deposit under this account has been made. Exceptions: Para -7, Para – 9
Form A
Rule 5 – Capital Gains Accounts Scheme 1988
(a) Account opening form.
(b) Depositor/Applicant has to select the type of Account – A or B or both while applying for such account.
(c) In case the depositor applies for Account – B, in that case, the applicant has to select whether to go for cumulative or non-cumulative deposit.  

SBI Capital Gains Account – Form A
Mode of DepositCash, Crossed Cheque or by Draft
Effective date for claiming exemption in case of Cheque or DraftDate on which the Cheque or Draft is received by the deposit office.
PassbookIn case of Account – A, Deposit office will issue passbook to the depositor containing details of deposit, withdrawals, and interest due.
Deposit SlipIn case of Account – B, deposit receipt will be issued by the deposit office that will contain details of the principal amount deposited, date of deposit, and date of maturity.
Duplicate Passbook or Receipt
Rule 6 – Capital Gains Accounts Scheme 1988
On an application made by the depositor, the deposit office will issue the duplicate passbook or receipt.
Transfer and Conversion

Rule 7 – Capital Gains Accounts Scheme 1988  
(a) Depositor can transfer the account(s) to another deposit office of the same institution.
(b) Form – B: Conversion of Account – B into Account – A, under the same section and subject to the other provisions of this scheme.
(c) If the request for Conversion of account is received before the expiry of the specified period – interest accrued shall be calculated in accordance with the provisions of sub-para (4) of Para 8.

[i.e., Applicable interest rate (less) 1% penalty for a premature withdrawal, and if any adjustment is required to be done it will be made against the amount lying to the credit of depositor in Account -B]

If the request of conversion is received on or after the expiration period – interest shall be calculated at the normal rate specified by the RBI – Para 8
Interest Calculation – As specified by RBI

Rule 8 – Capital Gains Accounts Scheme 1988
Account A:

(a) For each calendar month.
(b) On the lowest credit balance between the 10th day of the month to the end of the month.
(c) Interest to be credited half-annually.
(d) Interest only to be credited only if the interest amount is Rs.1 or more.
(e) Interest amount to be rounded off to the nearest 5 paise.
 Account B:

(a) Cumulative Deposit: interest accrued will be deemed to have been reinvested.
(b) Non-cumulative Deposit: Due and Payable on a quarterly basis.
Withdrawal

Rule 9 – Capital Gains Accounts Scheme 1988
Account – A:

(a) Form C, the depositor may withdraw any time subject to the other provisions of the scheme.
(b) In case of withdrawal other than initial withdrawal, the depositor shall furnish the Form D (Duplicate) – details regarding the manner and extent of utilization of the amount of immediately preceding withdrawal.
(c) In case of withdrawal exceeds Rs.25,000/-, the depositor bank will issue a demand draft in favor of the person to whom the depositor intends to make the payment.
(d) In case of withdrawal from Account – B, first convert it into Account – A, then the procedure is the same.
Utilization of withdrawal amount

Rule 10 – Capital Gains Accounts Scheme 1988
(a) Amount withdrawn is to be utilized for the specified purpose within 60 days from the withdrawal
(b) Un-utilised amount to be re-deposited in Account – A.
Nomination(a) Form E – Maximum nominee limit is 3.
(b) No Nomination – In case of account opened on behalf of (Minor, HUF, Firm, Company, AOP, or BOI).
(c) Form F – Fresh Nomination
(d) In case of multiple nominees, the first nominee shall alone have the right to received the amount credit in the deceased depositor.
(e) If the first nominee pre-deceased the depositor, and depositor has not canceled the nomination or substituted the nomination, in that scenario the second named nominee will be entitled to receive the amount of the deceased.
Loan against such depositDepositor is not entitled to place or offer the deposit as security for any loan or guarantee.

It has been mentioned under Rule 3 of Capital Gains Accounts Scheme 1988, that a deposit or deposits can be made under the various section(s) i.e. u/s 54, 54B, 54D, 54F, 54G or 54GB whereby any depositor intending to avail the benefit under the above-said section(s), as the case may be, in accordance with the provisions of the said scheme.

NHAI 54EC Capital Gain Bonds 2020-21 (Tr-XXI)

The time period for depositing the amount under the Capital gains Accounts Scheme 1988

Assessee can deposit the amount in the said scheme either in lumps sum payment or in installments at any time on or before the due date for filing the Income Tax return u/s 139(1) of the Income Tax Act as is applicable in the case of the Assessee or the eligible assessee as referred in Section 54GB.

Is it possible to close the account before the stipulated time period?

Yes, the depositor has to apply in Form G to the deposit office after getting approval from the concerned jurisdictional officer (AO), the deposit office shall pay the balance with interest to the credit in the bank account of the depositor.

In the case of an eligible company as per section 54GB, a joint application signed by the eligible assessee is to be submitted.

Period of Deposit

Period of deposit shall not exceed the period of 2 years or 3 years as the case may be from the date of transfer of original asset.

Maximum PeriodParticulars
2 YearsIf capital gain arises under section 54, 54B, or 54F, as declared by the depositor in Form A
3 YearsIf capital gain arises under section 54, 54D, 54F, 54G, and 54GB.

REC 54EC Capital Gain Tax Exemption bonds 2020-21

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