ICICI Bank Launches Capital Gains Account Scheme: A Comprehensive Guide

ICICI Bank, one of India's leading financial institutions, has launched the Capital Gains Account Scheme (CGAS) to assist resident individuals and Hindu Undivided Families (HUFs) in making tax-exempt deposits of long-term capital gains. This scheme, available from January 1, 2025, aims to provide a structured way to manage and reinvest capital gains while availing tax benefits.

ICICI Bank has been authorized to accept deposits under the Capital Gains Account Scheme (CGAS), 1988, a government-notified scheme under the Income Tax Act, 1961. The move follows the Government’s approval designating ICICI Bank as an authorized institution for handling CGAS deposits. This development is part of ICICI Bank's ongoing efforts to offer innovative financial solutions to its customers.

Under the CGAS, customers can deposit un-invested long-term capital gains or sale proceeds from the sale of specified capital assets. This allows them to avail select tax exemptions for up to three years while earning interest on the deposited funds. The scheme is particularly beneficial for taxpayers who are unable to reinvest long-term capital gains before the Income Tax Return (ITR) filing deadline.

Capital Gains Account Scheme is available for resident individuals and HUFs in ICICI Bank. It will be extended to non-individuals and NRIs in the near future. The key benefits of CGAS include:

- Tax Exemption : Depositors can claim exemption on long-term capital gains under relevant Income Tax sections by depositing un-invested capital gains or sale proceeds before the ITR due date. - Temporary Parking of Funds : The scheme allows for the temporary parking of funds for up to three years, providing time to plan reinvestment without losing exemption eligibility. - Interest Earned : The interest earned on the deposited funds is similar to that of regular savings accounts or fixed deposits. - Flexible Reinvestment : Proceeds can be invested in property, agricultural land, or new capital assets of industrial undertakings in non-urban areas or special economic zones, depending on the CGAS chosen. Withdrawal of proceeds requires proof of usage of funds.

ICICI Bank offers two types of accounts under the Capital Gains Account Scheme:

- Type A (Savings Account) : This is a mandatory account where customers can park their proceeds/capital gains. It allows flexible withdrawals linked to approved reinvestment purposes. - Type B (Term Deposit Account) : This account is available in both cumulative and non-cumulative formats for fixed-tenure deposits. The minimum and maximum tenures for fixed deposits under CGAS are as follows: - Cumulative FD : - Minimum 6 months and a maximum of 24 months from the date of the sales deed for the purpose of purchasing property. - Minimum 6 months and a maximum of 36 months from the date of the sales deed for the purpose of constructing property. - Traditional FD : - Minimum 7 days and a maximum of 185 days. - Traditional quarterly: Minimum 3 months and a maximum of 24 months from the date of the sales deed for the purpose of purchasing property. - Minimum 3 months and a maximum of 36 months from the date of the sales deed for the purpose of constructing property.

It's important to note that certain services are not available under the Capital Gains Account Scheme: - Cheque Book - Debit Card

Premature closure of fixed deposits is allowed but must be in accordance with the Capital Gains Account Scheme and ICICI Bank’s FD premature closure policy. The penalty for premature closure will be the same as per the bank’s FD framework.

The maximum tenure of deposit under the Capital Gains Account Scheme is: - 2 years for purchase - 3 years for construction

ICICI Bank’s Capital Gains Account Scheme provides a structured and beneficial way for individuals and HUFs to manage and reinvest their long-term capital gains while availing tax exemptions. By understanding the key features and benefits of this scheme, customers can make informed financial decisions to optimize their capital gains and tax planning.