What is Capital Gains Account Scheme?
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Introduction
This blog post explains about the capital gains account scheme and what is the purpose of this account. If you are aware of the long term capital gains, then you must learn about this account scheme to save the tax. This article will explain in details. If you have any doubts please post it in the comments section. Subscribe to our future articles here.
What is Capital Gains Account Scheme?
Capital gains arise when some one sells land, house or any capital assets with profit. It is liable to pay the tax for all the long term capital gains. But, there is exemption on capital gains if the amount is spent for buying the new property or constructing new property within the specified time.
In case if the amount is not utilized in the short time, it must be deposited into the special account called Capital Gains Account Scheme.
The scheme is called Capital Gains Account Scheme, 1988. The scheme is applicable to all assessees having capital gains. The deposits may be made in one lump sum or in installments at any time. The amount should be deposited before the due date for filing income tax returns.
Types of Capital Gains Account Scheme
There is two types of accounts under this scheme. One is deposit account A, which is savings account. Second one is deposit account B which is term deposit account.
The amount withdrawn should be utilised for the purpose within sixty days of the withdrawal.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.
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 of the previous year in which the period of three years from the date of the transfer of the original property expires.
Summary
I hope this article is very useful for saving the tax on capital gains. I wrote this articles because many people not aware of this scheme. Thank you for reading this article. If you have any doubts please post it in the comments section.
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5 Comments on this post
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C.Muruganandam said:
Dear Sir,
I am going to buy one house plot in bangalore by getting Loan from LIC Housing. The EMI is Rs 10,000 How much Tax excemption can i get for this EMI
thank u
November 22nd, 2009 at 5:45 am -
krishnas said:
Hello Muruganansam,
Thank you for the comments.
Please read this article:
http://www.thinkplaninvest.com/2009/04/home-loans-and-income-tax-benefits-part-2-2/Thanks,
KrishnaNovember 22nd, 2009 at 7:42 am -
M.N.MEHTA said:
Sub : Clarifications regarding Re-investment under Capital Gains Scheme
Dear Sir ,
I had sold one property for 23 lacs on 29.1.2007 and deposited the entire proceeds
In a Public Sector Bank Under Capital Gains Scheme 1988 initially for a period of
2 years. In the Month of Feb 2008, I had purchased a ready built flat for Rs 9.80 lacs
and the balance amount continued to remain in the above said scheme which was
further extended by one year with the intention of purchasing a plot and getting it
constructed as admissible under the Rules.Now if due to certain reasons one is not in a position to utilize the remaining amount
Within the stipulated period of 3 years , the balance amount remaining unutilized
And liable for tax under the Capital Gains.Will you clarify the following point s:
1. Can the above unutilized amount can be invested in “ NHAI “ or “ REC” Bonds for a further period of 3 years or 7 years ?
2. What is the amount of tax to be paid under the Capital Gains for the above amount ?
3. Can the Capital Gain amout arrived after applying the Indexation Method be now reinvested or tax liability arrived on capital gains thus arrived at be discharged ?I shall be higly grateful if you can kindly advise or guide in the above matter.
It maybe mentioned that the TDS on the Interest Portion Covered on Fixed
Deposit under the Capital Gains Scheme 1988 has been deducted by the bank or
Deposited by me in the respective financial years .Thanking You ,
Sincerely Yours
M.N.Mehta
February 3rd, 2010 at 2:32 am -
mahaveer said:
should i deposite more amount after opening long term a/c by a fix amount.
July 21st, 2010 at 10:17 pm
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