ICICI Bank rolls out CGAS for parking unutilised capital gains, saving tax for individuals, HUFs

ICICI Bank has introduced a Capital Gains Account Scheme (CGAS), offering taxpayers a structured mechanism to park unutilised capital gains and preserve eligibility for tax exemptions under the Income Tax Act, 1961. The scheme is targeted at resident individuals and Hindu Undivided Families (HUFs) who have earned long-term capital gains from the sale of immovable property or other specified capital assets but are unable to reinvest the proceeds immediately.

Under Indian tax laws, capital gains exemptions under provisions such as Sections 54, 54F and related sections are available only if the gains are reinvested within prescribed timelines. In cases where reinvestment is delayed beyond the income tax return (ITR) filing deadline, unutilised gains risk becoming taxable. The CGAS addresses this gap by allowing taxpayers to temporarily deposit uninvested capital gains in designated accounts, thereby maintaining exemption eligibility while reinvestment plans are finalised.

ICICI Bank said it has been authorised by the government to accept deposits under the Capital Gains Account Scheme, 1988, a government-notified framework under the Income Tax Act. The authorisation positions the bank among a limited set of institutions permitted to manage CGAS deposits in accordance with regulatory norms.

The scheme offers two account options. Type A operates as a savings account and allows withdrawals for reinvestment purposes approved under CGAS rules. Type B functions as a term deposit account and is available in both cumulative and non-cumulative formats, enabling taxpayers to park funds for a fixed tenure. Interest rates on both accounts are comparable to ICICI Bank’s regular savings accounts and fixed deposits, allowing customers to earn a return while their funds remain parked.

The CGAS permits deposits of unutilised capital gains for up to three years, depending on the nature of reinvestment. For the purchase of residential property, funds can be held for up to two years, while deposits meant for construction can be retained for up to three years. Fixed deposits under the scheme can be opened for varying tenures, with cumulative deposits typically ranging from six to 24 months, and non-cumulative deposits available for shorter periods in line with bank policies.

Withdrawals from CGAS accounts are subject to strict conditions. Funds can be withdrawn only for specified reinvestment purposes, such as the purchase or construction of residential property or acquisition of other qualifying capital assets. Account holders must submit proof of utilisation, ensuring compliance with CGAS guidelines. To reinforce regulatory discipline, the scheme does not offer cheque book or debit card facilities.

A key requirement for availing tax exemption is timely deposit. Taxpayers must deposit unutilised capital gains into the CGAS account before the due date for filing their income tax return. This temporary parking ensures that exemption claims remain valid even if reinvestment occurs later within the permitted timeframe. Interest earned on CGAS deposits is taxable in the year of accrual, in line with existing tax rules.

Currently, the scheme is available to resident individuals and HUFs. ICICI Bank has indicated plans to extend access to non-individual entities and non-resident Indians (NRIs) in subsequent phases, broadening the reach of the facility.

As capital gains tax rates rise and real estate transactions become more complex, the CGAS offers taxpayers flexibility and certainty. By providing a compliant way to park unutilised gains, the scheme helps taxpayers avoid hurried investment decisions, manage liquidity efficiently and optimise tax outcomes while staying within the framework of the law.