HDFC Bank has received government authorisation to offer deposits under the Capital Gains Accounts Scheme (CGAS), 1988, allowing taxpayers to park unused capital gains in savings accounts or fixed deposits for up to three years.
The facility is intended for taxpayers who are unable to complete their planned reinvestment before the income tax return filing deadline. It allows them to retain eligibility for applicable tax exemptions while earning interest on their deposits.
According to HDFC Bank, customers can open savings accounts and fixed deposits under the scheme at its urban and semi-urban branches. The facility will not be available at rural branches.
What is the Capital Gains Accounts Scheme?
The Capital Gains Accounts Scheme, 1988, allows taxpayers to deposit capital gains they intend to reinvest but have been unable to utilise before the applicable income tax return filing deadline.
Under the scheme, taxpayers can park unused capital gains in designated bank accounts for a maximum of three years.
The facility helps taxpayers retain eligibility for applicable capital gains tax exemptions under the relevant provisions of the Income-Tax Act, provided they meet the prescribed reinvestment conditions.
How can taxpayers benefit from HDFC Bank’s CGAS facility?
With the government’s authorisation, HDFC Bank customers will be able to deposit unused capital gains in savings accounts or fixed deposits under the scheme.
The facility gives taxpayers additional time to complete their planned reinvestment without immediately losing eligibility for applicable tax exemptions.
Depositors can also earn interest on the money held in these accounts for up to three years, subject to the applicable terms and conditions.
The bank said the facility would be available at its urban and semi-urban branches, excluding rural branches.
How long can money be kept under CGAS?
Taxpayers can keep unused capital gains deposited under the Capital Gains Accounts Scheme for a maximum of three years.
However, the money must be used for the intended investment within the applicable time limit to claim the relevant tax exemption. The tax treatment depends on the provisions of the Income-Tax Act that apply to the transaction.