.png){kind=logo}
Capital Gains Account Scheme (CGAS) for Land Sales (2026)
What the Capital Gains Account Scheme is, which land-sale exemptions use it, the return deadline for the deposit, and what happens to unused money.
If you sell land and plan to reinvest to save tax, but have not yet bought the new asset by the time you file your return, you may be able to park the gain in a special account. That is the Capital Gains Account Scheme. This guide sets out what we read on the Income Tax Department's pages and what we could not confirm.
What the scheme is
The Department's tutorial on exemptions from capital gains describes accounts under the Capital Gains Accounts Scheme as special-purpose accounts opened with an authorised bank. The Department's page on section 54B refers to the Capital Gains Deposit Accounts Scheme, 1988 and says the account is held at a public sector bank branch. A notification of 19 November 2025 (S.O. 5294(E), Notification 162 of 2025) is issued under the Capital Gains Account Scheme, 1988 and authorises the non-rural branches of 19 named banks, including HDFC Bank, ICICI Bank and Axis Bank, to accept deposits and maintain accounts. It defines a rural branch as one at a centre with a 2011 census population below ten thousand and excludes those branches.
The two Department pages use slightly different names for the 1988 scheme, so we use "Capital Gains Account Scheme" and refer to the notification. The scheme exists so that you do not have to buy the new asset before the return date to claim the relief. See the overview in capital gains on land.
Which land-sale exemptions can use it
| Income-tax Act, 2025 | Earlier 1961 section | Deposit under the notified scheme? |
|---|---|---|
| 82 (house) | 54 | Yes: deposit before the return and no later than the due date under section 263(1) |
| 83 (agricultural land) | 54B | Yes: section 83(2) |
| 86 (house, from asset other than a house) | 54F | Yes: section 86(2) |
| 85 (bonds) | 54EC | No deposit option on the Department's exemption page |
The Department's page "various exemptions available from capital gains" lists the deposit deadline "on or before the due date of filing the return of income" for sections 54, 54B, 54D, 54F, 54G and 54GA of the 1961 Act and shows no deposit option for 54EC, 54EE and 54GB. The 2025 Act sections above come from the Department's pages for sections 82, 83, 85 and 86. For the conditions of 54B and 54F, see capital gains on agricultural land: 54B and 54F.
Deposit deadline and proof
Under sections 82(2), 83(2) and 86(2) of the Income-tax Act, 2025, gains not used for the new asset must be deposited in a specified bank or institution and used under a scheme notified by the Central Government. The deposit must be made before the return is filed and no later than the due date for the return under section 263(1). Proof of deposit must be submitted with the return.
The 2025 Act pages do not name the scheme, but the November 2025 notification is issued under the 1988 scheme. We could not confirm from an official page that the 1988 scheme continues unchanged under the 2025 Act, so ask the bank and your adviser. Keep the deposit receipt with your return papers.
Tax rules change; check the current year
Tax rates, holding periods and exemption limits are revised in the Finance Act each year, and the Income-tax Act, 2025 replaced the 1961 Act for tax years starting 1 April 2026. Check the current text on incometaxindia.gov.in or with a chartered accountant. This page is general information and not tax advice.
Time to use the money, and what happens if you do not
| Relief | Time to use the deposit (per Department pages) | If unused |
|---|---|---|
| Agricultural land (83) | New agricultural land within two years after the transfer | Unused balance charged under section 67 in the tax year in which two years from the transfer expire; can be withdrawn under the scheme (83(4)) |
| House from any other asset (86) | Purchase within two years after, construction within three years | Unused balance charged under section 67 in the tax year in which three years expire (86(4)) |
| House (82) | Same windows as 86 | Charged in the tax year in which three years expire (82(4)) |
The Department's older tutorial describes the same pattern for the 1961 Act, with unspent deposits taxed as long-term capital gains in the year the period ends. Its page on section 54B adds that unused amounts are taxed as long-term or short-term capital gain in the year the two-year period ends.
How this connects to farmland
Two relief routes matter for land sellers. First, if you sold agricultural land that you or your parent used for farming in the two years before transfer, section 83 is available to an individual or HUF who buys other agricultural land. Second, if you sold land that was a long-term capital asset and you buy a house, section 86 applies. Both allow a deposit if you have not yet bought.
As a buyer, you will meet this when the seller says the sale proceeds are going to a bank account for reinvestment. The seller's CGAS deposit does not affect your title or your registration. It is a tax step on the seller's side. Still, a seller who needs time to reinvest may ask for the final payment in a particular way. Agree payment modes in writing and use bank transfers; see the sale deed guide.
Practical steps for a seller
- Sell the land and note the date of transfer.
- Decide which relief you will claim and the date by which the new asset must be bought or built.
- If you will not complete the purchase before your return due date, ask an authorised bank branch for the Capital Gains Account Scheme forms. We could not confirm the form names and fields from an official page.
- Deposit the unspent gain before you file, and not later than the due date for the return.
- Attach proof of deposit to the return.
- Withdraw only for the new asset, in line with the scheme. We could not confirm the withdrawal procedure.
- If the time limit ends and money is unspent, plan for the tax in that year.
Common mistakes to avoid
- Opening the account at a branch not authorised under the notification. The November 2025 notification excludes rural branches.
- Depositing more than the gain needed, or the wrong amount. The Department's pages work with the capital gain or the net consideration depending on the section.
- Missing the return due date, since the deposit has to be made no later than that date.
- Using the money for something other than the new asset.
- Selling the new asset too soon. For section 83 the cost is reduced if the new land is transferred within three years; for 85 the bonds are held five years.
- Assuming the relief covers rural agricultural land. Such land is outside capital gains in the first place; see capital gains on land.
Interest, account types and charges
We could not confirm from an official page the interest rate on CGAS deposits, the account types (savings or term), minimum amounts, nominee rules, charges or the premature withdrawal procedure. Bank websites describe these in different ways, and we did not use bank pages as a source. Ask the branch for its current written terms.
Related reading: tax benefits of agricultural land, how to sell agricultural land and TDS on property purchase.
What is unconfirmed
We could not confirm the CGAS form names, the interest rate, account types, withdrawal procedure or the list of banks beyond the November 2025 notification. We could not confirm that the 1988 scheme is the one named by the 2025 Act's "scheme notified by the Central Government". We also could not confirm any later Finance Act changes to the deposit rules. Nothing here is tax advice.
Frequently Asked Questions
What is the Capital Gains Account Scheme?
When must I deposit?
Which banks can open the account?
Does 54EC use the scheme?
How long do I have to use the money for agricultural land?
And for a house?
Do I need to attach proof to the return?
Can I withdraw the money if I do not buy?
Does the scheme apply to rural agricultural land?
Is there a cap?
Sources
- CBDT Notification 162 of 2025, S.O. 5294(E), 19 November 2025 (Capital Gains Account Scheme, 1988)
- Income Tax Department: Income-tax Act, 2025, section 83
- Income Tax Department: Income-tax Act, 2025, section 82
- Income Tax Department: Income-tax Act, 2025, section 86
- Income Tax Department: Income-tax Act, 2025, section 85
- Income Tax Department tutorial: exemptions from capital gains (as amended by the Finance Act, 2025)
- Income Tax Department: various exemptions available from capital gains
- Income Tax Department: exemption on transfer of agricultural land (section 54B)
