19 Private Banks Now Offering Capital Gains Account Scheme

The Finance Ministry has introduced major updates to the Capital Gains Account Scheme (CGAS), expanding its reach to include most leading private banks and embracing modern digital payment systems. The revamped scheme, effective from November 19, 2025, aims to simplify compliance for taxpayers seeking Long-Term Capital Gains (LTCG) exemption under the Income Tax Act.

The Ministry has issued two separate notifications to announce the overhaul. The first brings 19 private banks, including ICICI Bank and HDFC Bank, under the ambit of CGAS, granting them the authority to provide deposit facilities under the scheme. The second notification introduces reforms to payment modes, the recognition of electronic deposits and the incorporation of a new category of proceeds.

Broader Coverage and Digital Transformation

The Capital Gains Account Scheme, established in 1988, allows taxpayers to temporarily park capital gains from the sale of long-term assets until they are reinvested, as required for claiming tax exemption under Sections 54 to 54GB of the Income Tax Act. Since these sections do not cover short-term capital gains, they remain ineligible under CGAS.

According to Amit Maheshwari, Tax Partner at AKM Global, the revised scheme now includes Section 54GA, which covers cases where an industrial undertaking shifts operations from an urban area to a Special Economic Zone (SEZ). Additionally, taxpayers can now make deposits via popular digital payment methods such as UPI, NEFT, IMPS and credit cards, a move that aligns with India’s push toward paperless, cashless transactions.

Maheshwari added that from April 1, 2027, all CGAS account closures will be managed electronically using digital signatures or Electronic Verification Codes (EVCs). This transition marks a big step toward a fully digitized, transparent and efficient framework for taxpayers claiming LTCG exemptions.

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Clarity on Deposit Dates and Documentation

Lakshmi Sankar, Executive Director at Nangia Group, highlighted that the government’s clarification regarding the effective date of deposits is a welcome move. Whether the deposit is made via cheque, demand draft or electronic transfer, the date of receipt at the deposit office, subject to successful realization, will now be considered the effective deposit date.

To further streamline the process, electronic account statements will now hold the same legal recognition as traditional passbooks. Taxpayers can also electronically submit Form 15G and Form 15H to request lower or nil TDS deduction on interest earned from CGAS deposits.

Deposit Account Types: Flexibility for Investors

Under the updated scheme, two types of accounts are available to investors:

• Deposit Account-A– A savings-type account that allows withdrawals as needed. Interest, applicable at savings account rates, will be periodically credited to the account.
• Deposit Account-B– A term deposit account where funds can be locked in for a fixed duration, either as a cumulative or non-cumulative deposit. Investors can withdraw only after the deposit matures.

Investors are allowed to open an account with a minimum deposit of Rs 1,000 & in multiples of one rupee, thereafter, with no upper limit. The tenure for CGAS deposits will generally range from two to three years from the date of asset transfer, while the minimum maturity period will be seven days for cumulative deposits and six months for income-option deposits. Upon completion of the term, the fixed deposit will automatically close.

Moving Toward a Technology-Driven Compliance Era

The Finance Ministry’s latest amendments to the Capital Gains Account Scheme 2025 represent a proactive step toward digitizing India’s tax compliance mechanisms. With the inclusion of digital payments, private-sector banks and e-verification procedures, the revised framework promises greater accessibility, transparency and efficiency for taxpayers reinvesting their capital gains to claim tax exemptions under the LTCG provisions.

These reforms change the old paper-based system to a simpler, digital process. This supports the government’s primary goal of greater transparency and easier business.

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