Capital Gains Account Scheme: Parking Sale Money Before the ITR Deadline Without Losing the Exemption
If you're claiming a reinvestment exemption but haven't bought the new home by the time your income tax return is due, deposit the unspent amount in a Capital Gains Account Scheme (CGAS) account before that due date. For most salaried sellers that's 31 July. The deposit keeps the exemption alive for up to three years; whatever you haven't used by then is taxed.
Key takeaways
- CGAS holds money meant for a new house (or new farmland) that you haven't spent yet. Capital gain bonds under section 85 don't use it.
- Type A is a savings account for money you'll draw in stages; Type B is a term deposit for money you won't need for a while.
- Since the November 2025 amendment, private and small finance banks can offer CGAS too, and deposits can be made by UPI, NEFT, RTGS, net banking or card.
- Money withdrawn must be spent on the new house within 60 days, or put back.
- Unused money is taxed as long-term capital gain in the tax year in which three years from the sale run out.
Why the scheme exists
Section 82 of the Income-tax Act, 2025 (old section 54) exempts the gain on a house if you buy another within two years or build one within three. But your return is due long before that. So whatever part of the gain you haven't used by the due date for filing your return under section 263(1) (old section 139(1)) must be sitting in a CGAS account by that date. Show the deposit in your return and the exemption is allowed as if you had already bought the house. The scheme itself is the Capital Gains Accounts Scheme, 1988; section 536 of the new Act keeps schemes framed under the old Act in force.
| Exemption | 2025 Act (1961 Act) | What goes into CGAS | Time to use it |
|---|---|---|---|
| Sell a house, buy or build a house | Section 82 (54) | Unused part of the capital gain | Buy within 2 years or build within 3 years of the sale |
| Sell a plot, shop or other asset, buy or build a house | Section 86 (54F) | Unused part of the net sale price | Same 2 and 3 years |
| Sell farmland, buy farmland | Section 83 (54B) | Unused part of the capital gain | 2 years |
| Invest in capital gain bonds | Section 85 (54EC) | Not applicable | 6 months, bonds only |
Which due date, exactly
For the tax year 2025-26, returns in ITR-1 and ITR-2 are due on 31 July 2026, and ITR-3 and ITR-4 filers without an audit have until 31 August 2026 after the Budget 2026 change. The same structure applies for 2026-27 under section 263(1)(c). Your deposit must be made by the date that applies to you.
Missed it? The Gauhati High Court in Rajesh Kumar Jalan and several tribunal benches allowed the exemption where the money was spent on the house before a belated return was filed, but other rulings hold the CGAS deadline to the original due date. If the whole gain goes into the house before you file, no deposit is needed. Otherwise, deposit on time.
Type A or Type B
| Feature | Type A (savings) | Type B (term deposit) |
|---|---|---|
| Interest | The bank's normal savings rate | The bank's normal term-deposit rate for the tenure |
| Withdrawals | Any time, on Form C (first) and Form D (later ones) | Only by converting to Type A first; early conversion counts as premature withdrawal |
| Best for | Builder instalments, construction bills, a purchase due soon | Money you won't need until a later stage |
| Conversion | Can be moved to Type B | Moved to Type A on Form B |
Interest on both is taxed at your slab rate every year, and the bank will deduct TDS where it applies.
A common split is the next year's likely outgo in Type A and the rest in Type B. Paying a builder in stages almost always needs Type A; our guide to capital gains on an under-construction flat covers how that purchase counts for the exemption.
Opening the account, step by step
- Pick a bank. Branches of SBI and other public sector banks have always offered CGAS. The November 2025 amendment added private and small finance banks; reports list 19 of them, including HDFC Bank, ICICI Bank, Axis Bank and South Indian Bank, at their non-rural branches.
- Fill Form A with PAN, address proof and photographs, and say which account type you want and which exemption section the deposit is for.
- Deposit. Beyond cheque and demand draft, the amended scheme allows debit or credit card, net banking, IMPS, UPI, RTGS, NEFT and BHIM Aadhaar Pay.
- Register a nominee on Form E. It makes the account far easier to close if you die before using it.
- Keep the passbook or deposit receipt, or the electronic statement the amended scheme now accepts. You'll need it with your return and at closure.
The account is opened by the person who has the gain. If a flat was sold by two co-owners, each opens a separate account for their share; banks such as ICICI say joint accounts aren't permitted. NRIs can open one; ICICI's NRI page says it has to be on the NRO side.
Withdrawing and using the money
Use Form C for the first withdrawal and Form D for each one after, stating how earlier withdrawals were spent. Each withdrawal must be used for the new house within 60 days. If a payment falls through, put the money back into Type A; unspent withdrawals are treated as not used.
Keep a file linking every withdrawal to a builder's receipt, the new sale deed or a contractor's bill. At closure, the assessing officer checks exactly that.
What happens to money you don't use
If three years pass from the date of the original sale and part of the deposit hasn't gone into the house, that part is taxed as long-term capital gain of the tax year in which the three years end.
A worked example under section 82
You sell a flat in October 2025 and make a long-term gain of Rs 60 lakh. By 31 July 2026 you've paid Rs 20 lakh as booking and first instalments on a new flat, so you deposit Rs 40 lakh in CGAS and claim the full Rs 60 lakh exemption in your return. By October 2028 you've withdrawn and paid Rs 32 lakh to the builder. The Rs 8 lakh left over becomes long-term capital gain of the tax year 2028-29. At 12.5% plus 4% cess, that's Rs 1,04,000 of tax. If you used the 20% indexed route on the original sale, check with your CA how the unused slice is rated.
The section 86 difference
Under section 86 the exemption is proportionate. Sell a plot for a net Rs 1 crore with a Rs 40 lakh gain and put Rs 70 lakh into a house, directly or through CGAS, and the exemption is Rs 40 lakh x 70/100 = Rs 28 lakh. The taxable Rs 12 lakh costs Rs 1,56,000 at 12.5% plus cess. That's why a section 86 seller deposits the sale price, not just the gain.
Closing the account
Closure goes on Form G with the prior approval of your jurisdictional assessing officer, who wants proof the money went into the house or that tax on the unused part has been paid. From 1 April 2027 Forms G and H must be filed electronically, verified with a digital signature or EVC. If the depositor dies, the nominee, or the legal heir with a succession certificate or probate, closes it on Form H. A CBDT circular of 1996 (No. 743) says the unused balance is not taxed in the deceased's hands or the heirs'; it passes as part of the estate. That matters for families handling inherited property on both sides of a death.
Where this goes wrong
- Treating it as a normal savings account. Money withdrawn and parked elsewhere for more than 60 days is treated as unused.
- Buying a second house to use up the balance. Section 82 exempts one house, or two only once where the gain is up to Rs 2 crore.
For the exemptions themselves, see our capital gains tax guide; NRI sellers should also read our note on NRI property investment, and anyone reinvesting in a new flat should budget for stamp duty and registration, which count as part of its cost.
Frequently asked questions
Do I have to deposit the whole sale price in the capital gains account?
Not after a house sale. Under section 82 only the part of the capital gain you haven't yet spent on the new house has to go in. After selling a plot, shop or other asset and claiming section 86, it's the net sale price that must be invested, so the unused part of the price goes in. Anything beyond that is your money to use freely.
Can I open a CGAS account after filing my return?
You can open one, but the exemption depends on the money being in it by the due date for your return. Some tribunals and the Gauhati High Court have allowed the exemption where the gain was spent on a house before a belated return was filed, but a late CGAS deposit on its own is on weak ground. Treat 31 July, or 31 August for ITR-3 and ITR-4, as the deadline.
Is interest on the capital gains account tax-free?
No. Interest on both Type A and Type B deposits is taxed at your slab rate every year, and the bank may deduct TDS. The exemption covers only the principal you deposit and later spend on the new house. You don't have to reinvest the interest, and it doesn't count towards the amount you needed to deposit.
Which banks offer the capital gains account scheme now?
SBI and other public sector banks, and since the November 2025 amendment, notified private and small finance banks too, reported as 19 banks including HDFC Bank, ICICI Bank and Axis Bank, at non-rural branches. Check with the branch before you go, since not every branch handles CGAS.
What if I change my mind and don't buy a house at all?
The unused deposit is taxed as long-term capital gain in the tax year in which three years from your original sale expire. You then apply on Form G, with the assessing officer's approval, to close the account and take the money back. Paying the tax on time avoids interest; the exemption you claimed earlier is effectively reversed.
If you're deciding where to put a sale's proceeds while you look for the next home, the Realty Hunting team can help you line up the purchase timeline with your tax deadlines.
Sources
The figures and rules in this post were researched against these sources. Rates, fees and rules change; check the current figure with the authority before you pay or sign.
