Modernizing Capital Gains Accounts Scheme: Key Amendments in 2025

Modernizing the Capital Gains Accounts Scheme in 2025

In November 2025, the Ministry of Finance (MoF) announced significant updates to the Capital Gains Accounts Scheme (CAGS), first established in 1988. This comprehensive amendment aims to streamline the process by which taxpayers can retain tax exemption eligibility when dealing with capital gains. The updated framework allows for the temporary deposit of capital gains in designated bank accounts, effective from November 19, 2025.

Key Features of the Amendment

This amendment introduces a range of modern features to the scheme:

• New Payment Options: Taxpayers can now utilize various electronic payment methods, such as credit and debit cards, net banking, and popular digital payment interfaces like UPI and BHIM Aadhaar Pay.
• Expanded Bank Coverage: The list of banks authorized to accept CAGS deposits has been broadened to include 19 private sector and small finance banks, alongside Public Sector Banks and IDBI Bank. These banks are authorized to accept deposits at non-rural branches.
• Electronic Documentation: The amendment ensures electronic account statements hold the same legal status as traditional passbooks, facilitating easier verification and updates.

Sections and Compliance

The updated CAGS covers several sections of the Income-tax Act, 1961, including Sections 54, 54B, 54D, 54F, 54G, 54GA, and 54GB. These sections facilitate broader applicability for diverse taxpayer groups, including NRIs and businesses reinvesting capital gains. The amendment marks a notable shift towards digitalisation and streamlined compliance processes.

Additional Updates

From April 1, 2027, account closures can be executed solely through electronic filings, authenticated via digital signature or electronic verification codes. For deposits made via cheque, demand draft, or electronic method, the effective date is when the deposit office receives the payment along with the application.

Inclusion of Section 54GA

The amendment expands CAGS to include Section 54GA, allowing for tax exemption on unutilised capital gains when shifting an industrial undertaking from an urban area to a Special Economic Zone (SEZ).

These amendments reflect the Ministry of Finance's ongoing commitment to modernizing financial processes and enhancing compliance for taxpayers. Under the leadership of Union Minister Nirmala Sitharaman and Minister of State Pankaj Chaudhary, these changes represent a significant step forward in the digital transformation of tax-related procedures.