• Capital gains deposit scheme

Q1. In which banks can accounts under these schemes be opened ? Can it be opened in private banks also?
Q2. There are provisions like 54 B and 54 F which can be used for tax exemption. To avail these provisions, does one need to open separate accounts for separate provisions or a single account can be opened in which consideration received can be exempted using multiple provisions?
Q3. If the proceeds are received in two different assessment years, does one need to open separate accounts for different years, or the accounts opened in previous years can be used in forward years also?
Q4. For opening the accounts under these schemes, two forms are given by the bank. Form A and Form B. What purpose do these particular forms fulfil ?
Asked 13 days ago in Capital Gains Tax from Jalandhar, Punjab

Dear Sir,

 

Hope you are doing well !!

 

1. A capital gain account can be opened in any authorized bank recommended by the Government which includes Central Bank of India, State Bank of India and its subsidiaries, Syndicate Bank, IDBI Bank, Bank of Baroda and Corporation Bank.  Capital Gain Account facility is unavailable in rural banks.

 

2. Single account is enough to get exemption using multiple provisions.

 

3.The accounts opened in previous years can be used in forward years also.

 

4.Two types of deposits can be made under capital gains account scheme which is explained below:

  • Type A – Savings deposit – Type A account is similar to regular savings bank account of any bank where interest at the rate similar to saving bank account interest will be credited periodically and also passbook is issued to the deposit holder. Just like savings deposit, Type A account offers better liquidity and withdrawals can be made at any time.
  • Type B – Term deposit – Type B account is similar to a fixed deposit account of a bank which offers interest at the rate applicable to term deposit and has restrictions similar to a term deposit. Maximum term allowed for a Type B account is 3 years. The depositor is required to choose the term based on his plan for specified investment such as 2 years for the purchase of new house property or 3 years for construction. Just like fixed deposits, the depositor would receive deposit certificate containing all the details of deposit and is required to be submitted at the time of withdrawal. Further, auto-renewal of term deposit is not possible like a regular fixed deposit.

Term deposit can either be cumulative or non-cumulative i.e., interest is either cumulated and re-invested along with principal or paid at regular intervals respectively.

The interest rate for both deposits is fixed by RBI from time to time. The depositor may choose the appropriate type of deposit keeping in mind his plans for specified investment, requirement of fund, rate of interest etc.

Payal Chhajed
CA, Mumbai
2439 Answers
32 Consultations

5.0 on 5.0

The banks authorized by government are mostly public bank.

You can open single account but i would suggest you to open separate account for separate purpose/ section.

You can use same account but i would suggest you to open separate account so as the number of years would be different for both of them.

Type A account is saving account with less interest but better liquidity.

Type B account is fixed deposit account with more interest but cant be withdrawn before the term ends and if you want to withdraw you need to fill form with ITO and get his permission.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
1674 Answers
16 Consultations

5.0 on 5.0

Hello, 

 

a) You can open the account in any bank (Public / Pvt)

b) Single account can be opened as Capital gain saving scheme account

c) If amount is received in different financial years, then same account can be used.

d) through these forms, you can save your capital gain tax as its a separate account through which you have to make payment, in case of buying any new property.

 

Thanks 

CA Sourabh Pahuja 

Sourabh Pahuja
CA, Delhi
78 Answers
1 Consultation

5.0 on 5.0

1. You can open these accounts only in a public's sector banks like SBI, PNB etc.

 

2. You can use single bank account for multiple provisions.

 

3. Even if the proceeds have been received in different year, capital gain will be taxable in the year of transfer. So, the last date to put the money in cgds account will be same and will be calculated from the date of transfer.

 

4. Please check with bank they will be better equipped to answer this. 

Lakshita Bhandari
CA, Mumbai
3231 Answers
152 Consultations

5.0 on 5.0

Please call to discuss in length.

Vivek Kumar Arora
CA, Delhi
2715 Answers
124 Consultations

5.0 on 5.0

Separate applications shall be made for availing exemption under different sections and separate capital gains accounts shall be opened. Capital gains account can be opened in any of the authorised bank branches.  They are not opened in private banks and rural banks branches.  If the receipts are for same transaction then it should be deposited in one account.

Type A – Savings deposit – Type A account is similar to regular savings bank account of any bank where interest at the rate similar to saving bank account interest will be credited periodically and also passbook is issued to the deposit holder. Just like savings deposit, Type A account offers better liquidity and withdrawals can be made at any time.

Type B – Term deposit – Type B account is similar to a fixed deposit account of a bank which offers interest at the rate applicable to term deposit and has restrictions similar to a term deposit. Maximum term allowed for a Type B account is 3 years. The depositor is required to choose the term based on his plan for specified investment such as 2 years for the purchase of new house property or 3 years for construction.

 

 

Jasmina Jain Shah
CA, Greater Mumbai
306 Answers
3 Consultations

5.0 on 5.0

Hi

 

1.Capital gains account can be opened in any of the authorised bank branches.

2.Separate applications shall be made for availing exemption under different sections and separate capital gains accounts shall be opened.

3.One account can be used.

4.Form A is for opening the account.Form B for conversion of account from one type to another.

 

 

Hope it helps

Swati Agrawal
CA, Mumbai
1106 Answers
4 Consultations

5.0 on 5.0

Hello,

 

1. You can open this account is any of the authorised bank branches. Most public banks.

2. You can use one account for multiple provisions.

3. The same account can be used for proceeds received in different years.

4. Form A is for opening the account and Form B is for the conversion of accounts under the scheme.

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

Badlani & Associates

Hunny Badlani
CA, Neemuch
439 Answers
1 Consultation

5.0 on 5.0

Hello Sir,

 

1. The account under Capital Gains Accounts Scheme cannot be opened in all the branches and with all the banks. The government has identified the following 28 banks to accept the deposit under Capital Gains Accounts Scheme 1988.  These banks are: State Bank of India, Central Bank of India, Bank of India, Punjab National Bank, Bank of Baroda, UCO Bank, Canara Bank, United Bank of India, Dena Bank, Syndicate Bank, Union Bank of India, Allahabad Bank, Indian Bank, Bank of Maharashtra , Indian Overseas Bank, Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab & Sind Bank & Vijaya Bank. All branches of these banks except the rural branches are authorized to receive the deposit and maintain account under Capital Gains Accounts Scheme, 1988. Other than the above, no other bank is authorized to accept the deposit under Capital Gains Accounts Scheme.

 

2. Single account is sufficient for multiple provisions.

 

3. One account is sufficient i.e. the accounts opened in previous years can be used in forward years also.

 

4.Under the scheme there can be two types of accounts-

i. Deposit Account A:

This account is like a savings deposit account. Withdrawals may be made from the account from time to time, subject to other conditions of the scheme. This account is suitable for assessees who are planning to construct a house over a period of time.

ii. Deposit Account B:

This account is like a term deposit that is payable after a fixed period of time. The interest earned on the deposit may either be withdrawn periodically or it may be reinvested.

In order to open the account, an assessee must fill up the prescribed application form in duplicate. Further, the type of account – A or B – is to be specified. In case Deposit Account B is opted for, it has to be specified whether the account will be cumulative or non-cumulative. The proof of such deposit should be attached with the income tax returns.

Both the accounts will be eligible to interest as per the guidelines of the Reserve Bank of India. Moreover, a depositor may make or change nominations to the account by filling in the relevant forms.

The amount can be utilised in accordance with the scheme which the Central Government may frame. The amount withdrawn should be utilised for the purpose of purchase or construction of a house.The amount withdrawn should be utilised for the purpose within sixty days of the withdrawal. Any unutilised amount should be redeposited in Deposit Account A.

The amount already utilised by an assessee for the purpose of purchase or construction of a new property together with the amount deposited will be deemed to be the cost of the new property. In case the amount deposited is not utilised wholly or partly for the purchase or construction of the new property within the period specified, then the unutilised amount will be charged as income(as LTCG) of the previous year in which the period of three years from the date of the transfer of the original property expires.

Karishma Chhajer
CA, Jodhpur
1132 Answers
5 Consultations

5.0 on 5.0

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