Capital Gains Account Schemes – Savings and Fixed Deposit

Overview

Eligible Customers

Scheme Name: Fed Capital Gains Savings Account – (Type A)

Documents required – Type A

Withdrawal of funds – Type A

Scheme Name: Fed Capital Gains Deposit Account – (Type B)

Documents required – Type B

Deposit closure – Type B

Terms and Conditions

1. Purpose and Eligibility
   1. Capital Gains Account Scheme (CGAS), 1988 is governed by the provisions of the Income Tax Act, 1961.
   2. Funds being deposited represent capital gains eligible for exemption under the relevant sections of the Income Tax Act.
   3. This account is being opened solely for the purpose of enabling tax exemption on capital gains and for no other purpose.

2. Types of Accounts and Interest Rules & Tax rules
   1. The interest rates on CGAS accounts may differ from normal bank deposit schemes, and preferential rates applicable to Senior Citizens, staff, or high‑value deposits are not available under the CGAS
   2. The interest earned on CGAS accounts is taxable as per the prevailing tax laws.
   3. The interest payout, renewal, and conversion of Type B deposits shall be as per CGAS rules only.
   4. The interest on the CGAS account will be applied at the rates notified by the Bank for such accounts and credited at the intervals applicable to the respective account type. In case of any premature withdrawal or closure of a term deposit under CGAS, the interest paid may be adjusted in accordance with the applicable rules.

3. Deposit Restrictions
   1. Only eligible capital gains amounts can be deposited in the CGAS account.
   2. No regular savings, business income, loans, or any other funds will be deposited in this account.
   3. Fresh deposits are allowed only within the timeline prescribed under the Income Tax Act for claiming exemption.

4. Withdrawal Procedures and Restrictions
   1. Withdrawals can only be made for the specific purposes permitted under the Income Tax Act, such as purchase or construction of a residential property or any other purpose specified under the relevant section.
   2. Payments exceeding ₹25,000 will be permitted only directly to the vendor/contractor based on the bills submitted for purchase or construction.
   3. Form C should be submitted for withdrawal requests and Form D to declare utilization of previously withdrawn amounts.
   4. The amount withdrawn shall be utilized by the customer within sixty days from the date of such withdrawal, and any amount or part thereof that remains unutilized shall be re‑deposited into the Type‑A (Savings) account immediately thereafter
   5. Withdrawals may require submission of bill, invoices or supporting documents as demanded by the Bank.

5. Time‑Bound Utilization & purpose restriction
   1. The deposited amount must be utilized within the statutory period (e.g., 2 years for purchase or 3 years for construction of residential property).
   2. Once declared, the intended purpose as ‘purchase’ or ‘construction’ of a residential property, the chosen purpose cannot be modified thereafter under the Capital Gains Account Scheme
   3. Any amount not utilized within the prescribed time will be treated as taxable capital gains in the year in which the utilization period expires.
   4. The customer bears full responsibility for timely and correct utilization as required by law.

6. Prohibited Transactions
   1. No loan, overdraft, pledge, lien, or security can be created against the CGAS account.
   2. The account cannot be used for any purpose other than the notified purpose of investment/construction under CGAS.

7. Account Operation & Transfer
   1. The transfer of this account to another branch shall be subject to CGAS rules and required documentation.

8. Premature Closure
   1. The closure of a CGAS account is permitted only upon obtaining written approval from the jurisdictional Income Tax Officer (ITO) and submission of appropriate forms as required under the Capital Gains Account Scheme, 1988.
   2. The customer must provide the ITO approval to the Bank to initiate closure.
   3. In case of premature closure of a CGAS deposit (Type‑B), the applicable premature closure charges or interest adjustments, as per rule, will be deducted.

9. Tax Implications and Compliance Responsibility
   1. The Bank does not provide tax advice and its responsibilities are limited to maintaining the CGAS account as per the Scheme.
   2. The customer is solely responsible for compliance with the Income Tax Act, maintaining records, and accurately reporting utilization in tax returns.
   3. The customer accepts full responsibility for any tax liability arising due to non-compliance, non-utilization, delayed utilization, or misuse of funds.

10. Bank’s Limited Role
    1. Bank’s role is administrative in nature and limited to accepting deposits, allowing withdrawals as per prescribed forms, and maintaining the account.
    2. The Bank will not be liable for any tax consequences or disputes arising from incorrect utilization, documentation, or reporting of capital gains by the customer.
    3. All operations in the CGAS account shall be governed strictly by the Capital Gains Accounts Scheme, 1988 and any subsequent amendments thereof, including the requirement to submit and execute the prescribed statutory forms for opening, withdrawing from, converting, or closing the account, as applicable under the Scheme.

11. Digital / Channel Banking Restrictions
    1. No debit or transaction‑initiating facility for the CGAS account, including cheque books, debit cards, UPI, mobile/internet banking or any electronic payment capability. All withdrawals will only be carried out by the Bank, pursuant to duly submitted CGAS Forms, through bank-controlled instruments or authorised electronic modes as permitted under the Scheme as amended from time to time.