How One Real Estate Investor Saved Rs 10 Lakh in LTCG Tax with CGAS
Discover how Ramesh saved Rs 10 lakh in long-term capital gains tax by using the Capital Gains Account Scheme. Learn the importance of timely reinvestment and tax planning.
Capital GainsTax PlanningReal EstateLtcgCgasReal Estate NewsAug 27, 2025
Relief under Section 54 and Section 54F is available to individual taxpayers and Hindu Undivided Families (HUFs) by reinvesting gains in residential property. If reinvestment is not done before the return filing deadline, the Capital Gains Account Scheme (CGAS) allows taxpayers to park unutilised gains and still claim exemption.
In a case study shared by the tax advisory platform Tax Buddy, Ramesh sold his Hyderabad property in May 2024. The sale resulted in a long-term gain of Rs 50 lakh. At the 12.5% rate, his liability was Rs 10.40 lakh. Since he had not reinvested in a new property, Ramesh assumed he would have to pay the tax. He was advised to deposit the amount in the Capital Gains Account Scheme before filing his return. This preserved his exemption and reduced his liability to zero. The scheme gave him up to two years to buy a house or three years to construct one, without rushing into a purchase.
The due date for filing returns this year is 15 September 2025. For those selling property, this date is also the cut-off to secure exemptions if reinvestment has not been made. Depositing gains into CGAS before the deadline ensures compliance and helps avoid an unnecessary tax outgo.
Capital gains rules highlight the importance of timing in tax planning. Losses can be set off and carried forward for up to eight years if the return is filed on time. Missing the filing deadline can mean losing exemption benefits and facing a higher tax bill.
Frequently Asked Questions
What is the difference between short-term and long-term capital gains?
Short-term capital gains (STCG) apply to assets held for less than two years and are taxed at the individual’s income tax slab rate. Long-term capital gains (LTCG) apply to assets held for more than two years and are taxed at a flat rate of 12.5% without indexation, or 20% with indexation, whichever is more beneficial.
What is the Capital Gains Account Scheme (CGAS)?
The Capital Gains Account Scheme (CGAS) allows taxpayers to deposit unutilised capital gains into a designated account, preserving their exemption status. This is useful if reinvestment in a new property has not been made before the return filing deadline.
Can I choose between 20% with indexation and 12.5% without indexation for LTCG?
Yes, if the property was acquired before 23 July 2024, taxpayers can choose between 20% with indexation or 12.5% without, whichever is more beneficial for their tax situation.
What is the deadline for filing tax returns and securing exemptions?
The due date for filing returns this year is 15 September 2025. For those selling property, this date is also the cut-off to secure exemptions if reinvestment has not been made.
How long do I have to reinvest in a new property after depositing gains in CGAS?
After depositing gains in the Capital Gains Account Scheme (CGAS), you have up to two years to buy a new house or three years to construct one, without losing the tax exemption benefit.
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