You can save tax on long term capital gains of property. This is allowed in the income tax rules. But, there are some conditions for this. You have to reinvest the capital gains money in the property. You have to make this investment within the stipulated time limit.
After the Union Budget presented last month, the discussion on capital gains tax has increased. Tax has to be paid on the gains made on investment in real estate, gold and shares. This is called capital gains tax. There are many types of formulas for calculating this tax. In some cases, taxpayers get exemption on this tax. These include Capital Gains Account Scheme (CGAS). This account is opened for tax savings on capital gains.
What is the rule to save tax?
Income tax rules state that if a taxpayer wants to do tax-savings on capital gains made on selling real estate or gold, then he has to reinvest it within the stipulated time in the prescribed options. For this, this special account has to be opened. Many taxpayers do not know about this properly. Knowing about this account will help taxpayers save capital gains tax.
When was CGAS started?
The government first started this account in 1988. You will need to open this account only when you want to reinvest the capital gains money. If you deposit the capital gains money in this account, then there will be no tax on it. If you do not reinvest this money or do not deposit it in this account, then tax will have to be paid on it.
In which section is it provided?
In Income Tax sections 54, 54B, 54D, 54F, 54G and 54GA, the provisions for tax saving on capital gains have been mentioned. It states that tax exemption will be available on the capital gains money only if this money is reinvested. This investment has to be made within the prescribed limit. If you do not follow the time limit in this matter, then you may suffer huge losses. It is important to keep in mind that more than Rs 1 crore cannot be deposited in this account.
Where to open CGAS?
CGAS account can be opened in any bank including SBI. Capital gains money can be deposited in the account through cheque, cash or DD. Banks open two types of accounts. First, Type A account is considered a savings account. It gives the same interest as a savings account. Type B account works like an FD. It gives the same interest as an FD. Its lock-in period can be a maximum of 3 years.
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