Capital Gains Account Scheme (CGAS)
Park unutilised capital gains in a CGAS 1988 account before the ITR due date to keep Section 54/54F exemption while you buy or build your house.
Definition
The Capital Gains Account Scheme, 1988 (CGAS) lets you preserve a capital gains exemption when you have sold an asset but have not yet reinvested the money. Sections 54, 54F and related provisions give you 2 years to buy (or 3 years to construct) a new residential house — but if the amount is still unutilised by the due date of filing your ITR for the year of sale, you must deposit it in a CGAS account by that date to keep the exemption. The deposited amount is then treated as reinvested when you claim the exemption in your return.
There are two account types: Type A works like a savings account — flexible withdrawals, lower interest — and Type B works like a term deposit (cumulative or non-cumulative) with higher, locked-in interest. Accounts can be opened only at authorised banks (public-sector banks such as SBI, Bank of Baroda, and other notified banks, excluding rural branches), not at any private branch of your choice. Individuals, HUFs and other taxpayers eligible for the relevant exemption can open one.
Usage rules are strict: every withdrawal must be utilised for the specified purchase/construction within 60 days, and any unutilised part must be re-deposited (into Account A). Interest earned on CGAS deposits is taxable as income from other sources. Closing the account requires the jurisdictional Assessing Officer's approval (Form G).
The big pitfall: if the deposited amount is not used within the 2/3-year window, the unutilised balance is taxed as capital gain in the year that window expires — the exemption is withdrawn to that extent. Also remember the deposit deadline is the ITR due date (31 July 2026 for most individuals for AY 2026-27, unless extended), not the end of the assessment year.
Example
Kavya sold a plot in January 2026 but had not found a flat by July, so she deposited the ₹40 lakh gain in a Type A CGAS account at SBI before filing her ITR to keep her Section 54F exemption.
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Sources
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