Employment Tax

India | Capital Gains Accounts (Second Amendment) Scheme, 2025—simplified measures notified

Summary

The capital gain arising on sale of assets can be claimed as exempt if such capital gains or, in certain cases, net sale consideration, are reinvested in specified new assets and other prescribed  conditions are met. Where the taxpayer is unable to make such reinvestment before the due date of filing the India tax return of the relevant financial year, the law permitted such person to deposit the unutilised amount into a specially designated bank account as per the provisions of the Capital Gains Account Scheme (‘CGAS’) in order to be eligible to still claim the capital gain exemption for the financial year in which the capital asset was transferred. The erstwhile CGAS accounts were limited to nationalised banks only. The Ministry of Finance has now issued Capital Gains Accounts (Second Amendment) Scheme, 2025, on November 19, 2025 which aims to provide more convenience and flexibility to taxpayers by allowing deposits to be made in authorized private sector banks and other banking companies in India also, focusing on integration of digital payment systems and electronic compliance processes.

The detail

What is CGAS?

The CGAS enables taxpayers to save tax on capital gains by depositing the said gains/ net sale proceeds (as the case may be) in a specially designated bank account until such funds are utilized for the purpose of investment in the specified asset as per the provisions of the Income tax Act, 1961 (“the Act”).

What’s updated in the new scheme?

• The definition for ‘Deposit office’ has been expanded to include private sector banks and other banking companies authorized and notified1 by the Ministry of Finance, apart from extant branches of the State Bank of India or other public sector banks.
• The deposits can be made through payments by any of the following electronic modes:
  a) Credit card/debit card
  b) Net banking,
  c) IMPS (Immediate Payment Service),
  d) UPI (Unified Payment Interface),
  e) RTGS (Real Time Gross Settlement) and NEFT (National Electronic Funds Transfer)
  f) BHIM (Bharat Interface for Money) Aadhaar Pay.
  The effective date of deposit of such funds into CGAS shall be the date on which electronic mode payment is received by the banker along with the prescribed application as per the scheme rules.
• The electronic statement of accounts can now be used for opening of account or withdrawal from account, apart from passbook.
• With effect from 1 April 2027, taxpayers can exercise the option to close their CGAS account electronically and by authentication via Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
• The prescribed authority shall provide:
  a) the procedure for filing of Form G (for closure of account) and Form H (in the event
  of the depositor’s death, the nominee may apply to close the account),
  b) specify the data structure, standards and manner of generation of EVC for verification
  of the person furnishing the said Form,
  c) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form so furnished.
• Various forms such as Form A (opening deposit account), Form C (withdrawal), Form G and Form H have been revised to include fields for electronic payments and electronic verification for e.g. inserting “RTGS/IMPS/NEFT/Transaction No. ……dated……”.
• Furthermore, CGAS will also cover Section 54GA of the Act pertaining to exemption from capital gains arising from the transfer of assets of industrial undertakings from urban areas to any Special Economic Zone.

Takeaway

This amendment to CGAS is a welcome move, aligned with the Digital India movement, which will enhance taxpayers’ experience with the use of electronic modes of payment, electronic processes, thus reducing paperwork. Taxpayers now have more choice, as they can now deposit money in authorised private banks and other banking companies. This is especially helpful for a section of people who may not have accounts with nationalized banks.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Ishita Sengupta
India Lead / Mumbai

Sundeep Agarwal
Mumbai

Ravi Jain
Bengaluru / Kolkata

Anand Dhelia
Bengaluru / Hyderabad

Chander Talreja
Delhi NCR

Hitesh Sharma
Mumbai / Pune

Nishant Kumar
Bengaluru

Further information on Vialto Partners can be found here: www.vialtopartners.com

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