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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.