The changes came into effect on November 19.
CGAS allows taxpayers to deposit unutilised long-term capital gains and claim tax exemptions within prescribed timelines, particularly under Sections 54 and related provisions.
The mechanism is widely used by property sellers who require additional time to reinvest their gains.
Nineteen private sector banks added
The amendment broadens the definition of a “Deposit Office” to include 19 private sector and small finance banks, in addition to public sector banks and IDBI Bank.
These banks can now accept CGAS deposits at all non-rural branches.
The authorised banks are: HDFC Bank, ICICI Bank, Axis Bank, City Union Bank, DCB Bank, Federal Bank, IDFC FIRST Bank, IndusInd Bank, Jammu & Kashmir Bank, Karnataka Bank, Karur Vysya Bank, Kotak Mahindra Bank, RBL Bank, South Indian Bank, Yes Bank, Dhanlaxmi Bank, Bandhan Bank, CSB Bank and Tamilnad Mercantile Bank.
Branches located in areas with a population below 10,000, based on the 2011 Census, are classified as rural and are not permitted to open CGAS accounts.
Wider range of electronic payment modes
The revised rules expand the permitted electronic payment modes for CGAS deposits. Payments can now be made through credit cards, debit cards, net banking, IMPS, UPI, RTGS, NEFT and BHIM Aadhaar Pay. This expands the earlier limited definition of electronic payments and aligns the scheme with current banking practices.
Online account closure from April 2027
The scheme provides for electronic closure of CGAS accounts from April 1, 2027. Taxpayers will be able to submit closure requests using a digital signature or an electronic verification code. At present, closures are handled manually through bank branches.
Clarification on the effective date of deposits
For deposits made by cheque, demand draft or digital modes, the effective date for claiming tax exemption will be the date on which the payment instrument or electronic instruction is received by the deposit office along with the account application. The clarification aims to reduce ambiguity around time-sensitive deposits.
Electronic statements permitted
The amended scheme allows banks to issue electronic account statements in place of physical passbooks. This provision brings CGAS documentation in line with standard digital banking practices.
Extension to Section 54GA
CGAS has been extended to cover Section 54GA, allowing taxpayers to claim exemption by depositing unutilised capital gains arising from the shifting of an industrial undertaking from an urban area to a Special Economic Zone (SEZ).
Background
Capital gains tax applies to profits arising from the transfer of capital assets, including land, buildings, jewellery and certain investments. Depending on the holding period, gains are classified as short-term or long-term. CGAS is used when taxpayers intend to claim exemptions but cannot complete the reinvestment before the income-tax filing deadline.