Time limit for deposit in capital gain account scheme

While selling a property, you need to pay the tax to the Government which is known as long term capital gains. But if you are buying a property you can save on your taxes. The Income Tax Department provides relief if you buy a property after selling one within a limited period of time. To claim exemption you need to open a capital gain account. Let us dig into the details for the time limit for deposit in capital gain account scheme.

As per Section 54 and 54 F you can get tax exemption on capital gains. As per the guideline you need to open a CGAS account before the due date of filing income tax. There are 28 Banks which can help you open a CGAS account. These include  State Bank of India and other State Banks, Syndicate Bank, Central Bank of India, IDBI Bank, Bank of Baroda and Corporation Bank. You can open a CGAS bank account in the rural branches of these banks.

Who can deposit in the capital Gains Accounts scheme?

The deposit capital gain account scheme time limit is before filing the tax. This applies to any individual who is not able to invest within the specified time limit. You must deposit the money in less than 2 years so that you can reinvest it later. You should reinvest before the 2 years ends so that you can claim an exemption.

I hope you understand the time limit for deposit in capital gain account scheme.

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The time limit for capital gain investment in India, the Capital Gains Account Scheme is a mechanism provided by the Income Tax Act to defer the payment of capital gains tax on the sale of a property or asset. The CGAS scheme allows taxpayers to deposit the capital gains amount in a specified bank account and use it later for specific purposes like purchasing another property or asset.

1. Section 54 (for long-term capital gains on the sale of house property):

   • For purchasing a new residential property: The amount of capital gains needs to be deposited in the

     capital gain deposit scheme due date

     of filing the income tax return (usually July 31st of the assessment year). The entire amount or the unutilized amount until that date needs to be deposited by this deadline.

   • For constructing a new residential property:  The

     time limit to deposit in capital gain account scheme

     is before the due date of filing the income tax return. The construction needs to be completed within a specified period to claim the exemption.

2. Section 54F (for long-term capital gains on the sale of assets other than a house property):

   • The amount should be deposited in the Capital Gains Account Scheme before the due date of filing the income tax return.

Tax regulations can be subject to amendments, so it's recommended to refer to the latest official notifications or consult a tax professional to get accurate and up-to-date information regarding the time limits for depositing in the Capital Gains Account Scheme. The time limit to deposit in the capital gain account scheme must be made either one year before the property is sold or within two years of the transaction. I hope you have clarity on

CGAS scheme time limit now.

As you know, the Indian government has introduced varying schemes that encourage reinvestment of capital gains. These schemes allow people to make a profit for themselves. While the government also makes profit with the reinvested capital. I will share all the details about capital gains account scheme in the paragraphs below. 

What is Capital gains account scheme?

It is a scheme whereby citizens get relief from capital gains tax. The relief is given only when the capital gain is re-invested in certain specified assets within a specified time limit. Details about the assets have been mentioned under sections 54 to 54 GB of The Income Tax Act. 

There are instances where taxpayers are unable to reinvest the capital gains. To make sure, people don't use the scheme to commit fraud, there is a time limit for capital gain account schemes. Taxpayers need to invest before filing of return of income.

CGAS account or capital gains account scheme was introduced for this purpose. Taxpayers can easily keep their funds till they are invested for the prescribed purpose given in the Act. The account is used to keep any underutilised capital gains. A capital gains account can be opened at any of the authorised bank branches. Though, I believe rural branches of certain banks haven't been permitted yet.

Generally, the underutilised capital needs to be deposited in the account before the due date of return filing. To give you an example of the current financial year I.e. 31st July 2022 or the actual date of return filing for FY 2021-22, whichever is earlier.

In property, you need to reinvent within 6 months of the date of sale of immovable property.

This is all from my end on the capital gains account scheme. I hope my answer is helpful to you.