Recent Amendments to Capital Gains Account Scheme (CGAS) - Notifications No. 161/2025 & 162/2025

1. Background 

The Capital Gains Account Scheme, 1988 (CGAS) is a scheme created by the Central Government to help taxpayers who want to claim an exemption from capital gains tax but could not immediately invest their capital gains in specified assets within the period.

To improve convenience for taxpayers, the Central Board of Direct Taxes (CBDT) issued two notifications, Notification No. 161/2025 and Notification No. 162/2025, both dated 19 November 2025 making important changes to the Scheme.

2. Purpose of the Capital Gains Account Scheme (CGAS), 1988 

CGAS was introduced through a government notification pursuant to Section 54(2), Section 54B(2), Section 54D(2), Section 54F(4), Section 54G(2)and Section 54GB(2) of the Income-tax Act, 1961. These sections state that if capital gains are not used for the required purposes before the due date for filing the income tax return, the unutilized amount must be deposited in a CGAS account to become eligible for the exemption. 

3. Capital Gains Sections requiring CGAS Deposit 

Below is a summary of key sections that require taxpayers to deposit unutilized gains in CGAS: 

3.1 Section 54 – Residential House (Individual / HUF) 

This applies when long-term capital gain arises from the sale of a residential house and is invested in another residential property. 

3.2 Section 54B – Agricultural Land 

Individuals/HUFs can claim exemption when selling urban agricultural land and buying new agricultural land. 

3.3 Section 54D – Compulsory Acquisition of Industrial Land/Building 

3.4 Section 54F – Residential House (Investment out of Net Sale Consideration) 

This applies to individuals/HUFs investing net consideration from long-term assets (other than a residential house) into residential property. 

3.5 Section 54G – Shifting of Industrial Undertaking from Urban Area 

3.6 Section 54GA – Shifting of Industrial Undertaking to SEZ 

3.7 Section 54GB – Investment in Eligible Start-up (for Individuals/HUFs) 

4. Types of Accounts Under CGAS 

4.1 Account Type A – Savings Account 

A standard savings account with restrictions on withdrawal. 

4.2 Account Type B – Term Deposit Account 

A fixed deposit with a maturity period matching the proposed investment schedule.

Withdrawals require submission of Form C, D, or E, depending uo on the situation. 

5. Amendments under Notification No. 161/2025 dated 19.11.2025 

5.1 Inclusion of Section 54GA under CGAS 

Taxpayers can now deposit unutilized capital gains from transactions under Section 54GA (Shifting of industrial undertaking to SEZ) into CGAS and claim an exemption. 

Impact of Amendment: 

• Beneficial for industrial undertakings moving to SEZs

• Ensures equality across capital-gain exemptions 

5.2 Introduction of “Electronic Mode” for Deposits 

Previously, methods of deposit were limited to: 

• Cash 

• Crossed cheque 

• Demand draft 

Now, electronic payment systems are recognized, including: 

• Credit Card 

• Debit Card 

• Net Banking 

• IMPS 

• UPI 

• RTGS 

• NEFT 

• BHIM Aadhaar Pay 

This brings CGAS in line with modern digital banking practices and improves accessibility. 

5.3 Mandatory Online Account Closure

Effective from 1st April 2027, all account closure applications must be submitted electronically, supported by a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). This reduces the need for physical branch visits. 

5.4 Expanded Definition of “Deposit Office” 

Previously, only certain public-sector banks were authorized. The term "Deposit Office" now includes any banking company that: 

1. Accepts deposits 

2. Maintains CGAS accounts 

This expansion leads to increase in availability of banks. 

6. Amendments Under Notification No. 162/2025 dated 19.11.2025 

CBDT has authorized 19 additional private-sector and other banks to handle CGAS accounts. The list of such banks are given below: 

1. HDFC Bank Ltd 

2. ICICI Bank Ltd 

3. Axis Bank Ltd 

4. City Union Bank Ltd 

5. DCB Bank Ltd 

6. Federal Bank Ltd 

7. IDFC FIRST Bank Ltd 

8. IndusInd Bank Ltd 

9. Jammu and Kashmir Bank Ltd 

10. Karnataka Bank Ltd 

11. Karur Vysya Bank Ltd 

12. Kotak Mahindra Bank Ltd 

13. RBL Bank Ltd 

14. South Indian Bank Ltd 

15. Yes Bank Ltd 

16. Dhanlaxmi Bank Ltd 

17. Bandhan Bank Ltd 

18. CSB Bank Ltd 

19. Tamilnad Mercantile Bank Ltd 

Impact of Amendment: 

• Improved nationwide access, especially in urban and semi-urban areas 

• Reduced reliance solely on PSU banks  

7. Practical implications for Taxpayers 

7.1 Improved Flexibility 

Depositors can now use top private-sector banks and digital methods for making deposits. 

7.2 Reduced burden in compliance

Digitalization of closure requests improves convenience and cuts down on manual paperwork. 

7.3 Increased Options for Industrial Undertakings 

Section 54GA now benefits from CGAS, solving long-standing practical issues. 

8. Key Points to be observed for better Compliance

• Deposit unutilized capital gain before the due date for filing under Section 139(1) 

• Submit proof of deposit in CGAS along with the income tax return 

• Withdrawals must be used only for the purpose specified under the relevant section 

• Unutilized balance becomes taxable in the year when the conditions related to exemption fail 

• From 1st April 2027, Closure of the CGAS account must be done online 

9. Summary 

By expanding the CGAS Scheme to Section 54GA, allowing electronic deposit methods, adding new authorized banks and requiring digital closure, CBDT has modernized a key system for capital gains tax planning, apart from providing convenience to Taxpayers.

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