JGovernment Introduces Key Changes to Capital Gains Accounts Scheme:
- The definition of “Deposit Office” has been expanded to include 19 private sector and small finance banks, giving taxpayers more choices.
- Taxpayers can now use electronic payment methods such as UPI, Net Banking, and others for deposits, replacing physical cheques and demand drafts. The effective date for claiming tax exemption is the date the payment is received, provided it is realized.
- From April 1, 2027, CGAS accounts must be closed electronically using a digital signature or electronic verification code, replacing the manual process.
- The scheme now includes capital gains from relocating an industrial undertaking from an urban area to a Special Economic Zone, allowing exemption under Section 54GA.
- Electronic account statements are now accepted for verification and withdrawals.
- Forms such as A and C have been updated to include details for electronic transactions.
The Indian government has introduced significant amendments to the Capital Gains Accounts Scheme, 1988, aiming to simplify tax rules and promote economic growth. Here are the key changes:
Simplified Holding Periods: The holding period for long-term capital gains has been reduced to 12 months for listed securities and 24 months for other assets, including gold, debt funds, and unlisted shares.
Tax Rates: Long-term capital gains tax rate has been increased to 12.5% for listed securities, while short-term capital gains tax rate has been increased to 20%.
Indexation Benefit: Indexation benefit has been removed for assets sold after July 23, 2024, except for real estate.
Exemption Limit: The exemption limit for long-term capital gains has been increased to ₹1.25 lakh per year.
Rollover Exemptions: Rollover exemptions under Sections 54 and 54F have been capped at ₹10 crore.
Capital Gains Accounts Scheme (CGAS)
The CGAS allows individuals to deposit unutilized capital gains in designated accounts to defer tax liabilities. The scheme features two types of accounts:
Deposit Account-A (Savings): Earns interest at rates specified by the Reserve Bank of India.
Deposit Account-B (Term Deposit): Offers cumulative or non-cumulative deposits.
Eligibility and Benefits:
Individuals, Hindu Undivided Families (HUFs), and other eligible taxpayers can open CGAS accounts.
Taxpayers can claim exemptions on capital gains by reinvesting in specified assets, such as residential property or government bonds .