Capital Gains Accounts Scheme – Key Amendments!

Managing capital gains can be a complex process, especially when taxpayers need more time to reinvest gains into eligible assets to claim exemptions. The Capital Gains Accounts Scheme (CGAS), 1988 has long served as a structured mechanism to help taxpayers deposit unutilized capital gains until the investment is completed.

In November 2025, the Central Government issued Notification S.O. 5293(E) dated 19.11.2025, bringing important amendments to the existing scheme. These updates aim to modernize the procedure, increase transparency, simplify compliance, and align the scheme with today’s digital financial environment.

This blog explains the key amendments and their implications for taxpayers.

1. Introduction to CGAS

Before exploring the amendments, it is essential to understand the purpose of CGAS.

Under various sections of the Income-tax Act—such as Section 54, 54B, 54F, 54EC, and 54GA—taxpayers can claim exemption on capital gains if they reinvest the proceeds within the prescribed timelines. When they are unable to invest before the due date of filing the income tax return, they can deposit the unutilized amount in a CGAS account.

This ensures compliance and secures the tax exemption until the investment is eventually made.

2. Key Amendments Introduced Under Notification S.O. 5293(E)

a) Inclusion of Section 54GA References

One of the important updates is the explicit insertion of references to Section 54GA, which deals with capital gains arising from the shifting of an industrial undertaking from an urban area to a Special Economic Zone (SEZ).

This ensures clearer alignment between the scheme and the provisions under which taxpayers can claim exemptions.

b) Updated Definition of Deposit Office

The amendment revises the definition of “Deposit Office” to reflect changes in banking infrastructure and modern channels of banking services.

This expands the scope of institutions that can operate CGAS accounts, making it easier for taxpayers to access deposit facilities.

c) Electronic Payment Modes Formally Recognized

One of the most taxpayer-friendly updates is the formal recognition of digital payment modes such as:

  • UPI

  • IMPS

  • RTGS

  • NEFT

  • Internet banking and other electronic forms

Earlier, many deposit offices accepted only traditional modes such as cheques and demand drafts. With digital payments officially allowed, the deposit process becomes faster, safer, and more convenient.

d) Electronic Account Statements Allowed

The scheme now acknowledges electronic account statements as valid records.

This is particularly beneficial because earlier, many offices relied solely on physical passbooks or receipts.

Digital statements allow:

  • Easy tracking of deposit balances

  • Simple record-keeping

  • Quick submission during tax assessments

This shift also promotes transparency and reduces the chances of misplacement or discrepancies.

e) Electronic Submission of Forms and Documents

The amendments now allow important documents and forms under CGAS to be submitted electronically, reducing the need for physical visits to the bank or deposit office.

This convenience aligns with the government’s push towards fully digital taxpayer services.

f) Mandatory Electronic Filing for Closure of CGAS Accounts (Effective 1 April 2027)

One of the most significant and future-ready amendments states that from 1 April 2027, closure of CGAS accounts must be filed electronically using either:

  • DSC (Digital Signature Certificate), or

  • EVC (Electronic Verification Code)

This measure enhances security and ensures authenticity in closure requests.

It also helps streamline communication between banks and tax authorities, reducing delays in processing.

3. Benefits of These Amendments for Taxpayers

✔ Improved Efficiency

Electronic modes reduce delays related to manual documentation and physical submission.

✔ Enhanced Transparency

Digital statements and online submissions give taxpayers more clarity on their account status.

✔ Better Compliance

With simplified processes, taxpayers can meet deadlines easily and avoid losing exemptions.

✔ Reduced Bank Visits

The ability to transact, submit forms, and eventually close accounts online lowers compliance burdens.

✔ Greater Convenience for NRI and Remote Taxpayers

NRIs, senior citizens, and individuals living in remote locations benefit significantly from digital accessibility.

4. What Taxpayers Should Do Now

Though several changes are already effective, taxpayers must note the important deadline of 1 April 2027 for electronic closure filing.

To stay compliant, taxpayers should:

  • Maintain updated email and mobile details with the bank

  • Familiarize themselves with DSC/EVC processes

  • Keep digital copies of all statements

  • Check whether their bank is fully aligned with the new CGAS rules

Professional guidance from tax practitioners can help ensure seamless compliance.

Conclusion

The amendments to the Capital Gains Accounts Scheme, 1988 reflect a strong push toward digitization and ease of doing compliance. By incorporating electronic payment modes, online documentation, updated definitions, and future-ready digital closure procedures, the government has made CGAS more accessible and transparent for taxpayers.

These changes not only simplify the administration of capital gains exemptions but also enhance taxpayer experience and efficiency.

If you are planning to invest capital gains or need guidance on CGAS deposits, closures, or exemptions, expert assistance can ensure hassle-free compliance and timely benefits.

Stay informed and stay compliant with the latest tax regulations!

📞 Contact us today: +91 7305701454
📧 Email: auditsiva2@gmail.com
🌐 Website: www.taxlaservices.com

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