Capital Gains Account Scheme (CGAS): A Simple Guide
You sold a property and made a capital gain. You plan to buy a new house and save tax under Section 54 or 54F. But the new house is not ready yet, and the income tax return due date is coming. This is where the Capital Gains Account Scheme (CGAS) helps you. It lets you park the gain in a special bank account and still keep the tax exemption.
Many sellers lose their exemption simply because they did not know about this account. This guide explains what CGAS is, who needs it, and how to open one.
Quick summary
- CGAS (Capital Gains Account Scheme, 1988) is a special bank account to hold capital gains you have not yet reinvested.
- Use it when you claim Section 54, 54B, 54F or similar exemptions but cannot buy or build the new asset before your ITR due date.
- Deposit the amount before the return filing due date (usually 31 July, or 31 October in audit cases).
- Two account types: Type A (savings) and Type B (term deposit).
- Withdraw only to buy or build the new property. Use it within the time limit or the balance becomes taxable.
Why the scheme exists
Sections like 54 and 54F give you time to reinvest. You get up to 2 years to buy a house and up to 3 years to construct one. But the tax return is due much earlier, often within a few months of the sale. The law needed a way to prove you still intend to reinvest. The Capital Gains Account Scheme is that proof. You deposit the money in the account, mention it in your return, and your exemption stays safe.
Who should use CGAS
You need this account if all three points are true:
- You have a long-term capital gain from selling property, land, shares or another asset.
- You want to claim an exemption by reinvesting in a house (Section 54, 54F) or in agricultural land (Section 54B).
- You have not completed the new purchase or construction before your ITR due date.
If you already bought the new house before filing your return, you do not need CGAS. You simply claim the exemption directly.
How much to deposit
The amount depends on the section you use.
| Section | What you deposit |
|---|---|
| Section 54 (house to house) | The capital gain amount not yet used |
| Section 54F (other asset to house) | The net sale value not yet used |
| Section 54B (agri land to agri land) | The capital gain not yet used |
Note the difference. Under Section 54 you park only the gain. Under Section 54F you must park the full net sale amount, not only the profit. To understand these two sections better, read our guide on Section 54 vs 54F.
Type A vs Type B account
Banks offer two kinds of accounts under this scheme.
| Feature | Type A (Savings) | Type B (Term Deposit) |
|---|---|---|
| Nature | Like a savings account | Like a fixed deposit |
| Interest | Lower, savings rate | Higher, FD rate |
| Withdrawal | Easy, anytime | On maturity or with penalty |
| Best when | You will buy or build soon | Money will sit longer |
Many people open Type A because construction payments happen in stages and they need easy access. If your new asset is 2 to 3 years away, Type B earns you more.
How to open a CGAS account
- Go to a branch of an authorised bank. Most public sector banks like SBI, PNB, Bank of Baroda and Canara Bank offer it. Private banks usually do not.
- Fill Form A to open the account.
- Submit PAN, address proof, photograph and details of the property you sold.
- Deposit the amount by cheque, cash or transfer before your ITR due date.
- Keep the deposit proof. You will mention this in your return.
How to withdraw and use the money
Use Form C for the first withdrawal and Form D for later ones. You must use the withdrawn amount within 60 days for the purpose you claimed. Always keep bills and payment receipts. The tax officer can ask for proof that the money went into the new house.
What happens if you do not use it in time
This is the part that catches people. If you do not buy or build the new property within the time limit (2 years to buy, 3 years to build), the unused amount becomes taxable. It is taxed as a long-term capital gain in the year the time limit ends. So the account buys you time, but it does not remove the deadline.
A simple example
Suppose you sold a plot in June 2026 and made a gain of Rs 40 lakh. You want to build a house and claim Section 54F. By July 2027, when your return is due, construction has not started. You deposit the required amount in a CGAS Type A account before filing. Your exemption is protected. You then use the money over the next 2 to 3 years to build the house, withdrawing in stages with Form D. If you finish in time, the gain stays fully exempt.
If you are still planning the sale, our guide on how to save capital gains tax on property covers all your options in one place.
Frequently asked questions
Which banks offer the Capital Gains Account Scheme?
Mainly public sector banks such as SBI, PNB, Bank of Baroda, Canara Bank and Union Bank. Rural and most private banks do not offer it. Ask the branch specifically for a "Capital Gains Account Scheme" account.
What is the last date to deposit money in CGAS?
Before your income tax return due date for that year. For most individuals that is 31 July. If your accounts need an audit, it is 31 October.
Can I deposit after the due date?
No. If you miss the due date, the unused gain is taxed that year. Deposit on time to keep the exemption.
Is the interest earned on CGAS taxable?
Yes. Interest from the account is taxable as normal income under "income from other sources". TDS may apply on Type B deposits.
Can I close the account whenever I want?
You cannot close it freely. To close, you need approval from the assessing officer, who signs Form G. This makes sure the exemption rules are followed.
What if I only use part of the money?
The part you use for the house stays exempt. The unused part becomes taxable when the time limit ends.
Can NRIs open a CGAS account?
Yes, an NRI selling property in India can use the scheme to claim these exemptions. See our guide on NRI selling property in India for the full process.
Do I need CGAS if I already bought the house?
No. If the new house is bought or built before you file the return, claim the exemption directly. CGAS is only for money still waiting to be reinvested.
Can I use CGAS money for anything else?
No. It can only be used for the specific purpose you claimed, such as buying or building a residential house. Using it for other spending breaks the rule and makes the amount taxable.
How is the account different from a normal FD?
A normal FD gives you free access to your money. A CGAS account is locked to the tax purpose. You need special forms to withdraw, and you must prove the money went into the new property.
What forms are used in CGAS?
Form A to open, Form C for first withdrawal, Form D for later withdrawals, Form B to convert between account types, and Form G to close the account.
Is there a limit on how much I can deposit?
There is no upper limit on the deposit itself. But the exemption you can claim under Section 54 and 54F is capped at Rs 10 crore from AY 2024-25.
A CGAS account is a small step that protects a big tax saving. If your sale and purchase do not line up, open one before you file your return. When you are ready to reinvest, browse new projects that fit your plan.
