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Capital Gain Account Scheme, 1988 : Benefits
Capital Gain Account Scheme, 1988 : Features
|Scheme Code In Finacle||TD121- CAPITAL GAINS-1988(CUMU)
TD122- CAPITAL GAINS-NON CUM-QIP
TD144- CAPITAIL GAIN SCHEME- SDR
|Introduction Of Scheme||
Government of India, Ministry of Finance, Department of Revenue (CBDT) in exercise of the powers conferred upon by Section 54 of the Income Tax Act, 1961 formulated a scheme called "The Capital Gains Account Scheme, 1988".
According to the provisions of Section 54 (F) of Income Tax Act,1961 w.e.f. 1.4.1988, an assessed earning long term capital gains on sale of any asset who desires to utilize the net consideration for purchase of residential house within two years (2 years) from the date of sale of the capital asset is exempt from tax on the capital gains provided he deposits the sales consideration in authorized branches of Banks authorized to receive deposits and maintain accounts. The amount deposited in the account is permitted for withdrawal for the purpose of purchase of house for self-residence of the depositor, within two years of receipt of sales consideration. If the amount is not utilized within a period of two years, the long term capital gain on sale of the capital asset shall be subject to tax in the year in which the long term capital gains were earned. For withdrawing money from this account after the period of -2- years is over without purchasing house for self-residence, the permission of Income Tax department is necessary.
All branches of public sector banks (except rural branches) are authorized to accept deposits under the scheme.
|Types Of Account||
The scheme provides for two types of accounts viz.
(In exceptional cases like customers belonging to Bora Muslim community, current account titled A-I can be opened instead of savings deposits).
|Opening Of Accounts||Any person / firm / association of persons / company / HUF etc.; intending to avail of the benefits under Section 54, 54B,; 54D, 54F and 54G of the Income Tax Act, 1961 (43 of 1961); may open abovementioned accounts.|
|Other Provisions||Joint accounts cannot be opened under Capital Gains Accounts Scheme, 1988.|
|Minimum Amount Of Deposit||Minimum Amount Rs 1000/-|
|Maximum Amount Of Deposit||No upper limit.|
|Period Of Deposit||
|Rate Of Interest||
|Coverage||The Capital Gains Deposit Scheme is operative at all branches except Rural branches.|
|Nomination Facility||Individual depositor (not being a minor) can make; nominations in favour of one or more persons, but not exceeding three, to receive the amounts standing to his credit in Account A or Account B in the event of his; death before the amount has become payable, or if payable, but not paid.
Cancellation or change of nomination made earlier will be allowed.
|Tax Deduction At Source||Interest payment is subject to Tax Deducted at source (TDS) as per prevailing Income Tax ACT.|
|Availability Of Loan/Overdraft||Not applicable.|
|Other Terms And Conditions||
|Premature Closure||Interest should be paid after deducting penalty of 1% from such applicable rate or the contracted rate whichever is lower in the cases which are subject to charging penalty.|
|Closure Of The Account||
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What is the Capital Gains Account Scheme?
With effect from 1.4.1988, an assessed earning of long-term capital gains on sale of any asset is the money you make when you sell the asset, according to Section 54 (F) of the Income Tax Act of 1961. The government encourages the tax-free reinvestment of capital gains on specific assets over a specified time period. The time restriction occasionally exceeds the filing return date to guarantee that investors do not miss out on benefits and exclusions that allow them to hold capital gains till reinvesting. Sections 54 and 54F of the Income Tax Act of 1961 shield long-term capital gains from taxation.
Who can deposit in the Capital Gains Account Scheme?
Any individual/firm/association of individuals/company/HUF, etc., who wishes to profit from the provisions of Sections 54, 54B, 54D, 54F, and 54G of the Income Tax Act of 1961 (43 of 1961), may deposit in the Capital Gains Account Scheme 1988.
Where can you open a Capital Gains Account?
All branches of public sector banks (except rural branches) are authorised to accept deposits under the scheme.
How do you open a Capital Gains Account?
Capital gain accounts can be opened by visiting the authorised branches along with the required documents.
How long can we keep money in a Capital Gain Account?
You cannot exceed 2 to 3 years from the date of transfer of original asset as given below:
Max 24 months - if capital gains are U/s 54, 54B, 54 F. (As declared in Form A by depositor).
Max 36 months - if capital gains are U/s 54, 54 D, 54 F, 54 G & 54GB (As declared in Form A by depositor).
How much should I invest in the Capital Gain Account Scheme?
There is no upper limit to invest in a Capital gain account scheme (CGAS).
What is the lock-in period for Capital Gain Bonds?
The amount deposited in the account is permitted for withdrawal for the purpose of purchase of house for self-residence of the depositor, within 2 years of receipt of sales consideration.
If the amount is not utilised within a period of 2 years, the long-term capital gain on sale of capital asset shall be subject to tax in the year in which gains were earned.
How do you withdraw from the Capital Gains Account Scheme?
Form C must be completed in order to withdraw funds from the Capital Gains Account Scheme. The money must be used within 60 days after withdrawal. The money cannot be redeposited instantly. Apply for a second withdrawal using Form D. Where the withdrawal amount exceeds Rs. 25,000, payment should be made only by crossed demand draft/cheque bankers in favour of the person to whom the depositor desires to make payment. If a withdrawal from a term deposit account is desired, the depositor must first request for conversion to a savings account.
Is interest in the Capital Gain Account taxable?
Interest payment is subject to Tax Deducted at source (TDS) as per prevailing Income Tax ACT.