Capital Gain Tax Account

 

Capital Gain Tax Account

Government of India has launched a lot of schemes and plans to save tax. One such scheme is the capital gain tax account scheme. According to government rule if you sell any of your existing property or assets your generated capital falls under tax payment. If you want to save such tax you need to re-invest that money into some other asset or property within a mentioned period of time. If by any chance you fail to do so then you can drop the money in capital gain account in your bank. The money can be then used for reinvestment.

Capital Gain Tax Account

How to Open a Capital Gain Tax Account

Government has given authority to total 28 banks, excluding rural branches, to open such accounts. There are nationalised as well as private banks under which you can open this account. It is a similar to savings account. You need a form which is required to fill and submit to your branch. You need some more documents like Photos, address proof, PAN number etc.

The procedure is simply like any other saving account opening procedure. You can drop the money either all at a time or by instalment. Cheque, cash or demand draft can be used to drop the money in your account. There are two types of accounts under capital gain account.

  • Savings account: if the money in your account is being used to build a house then you are required to withdraw money regularly. In this case savings account will be apt for you.
  • Term deposit account: if you are going to buy a ready house then this type of fixed deposit will be appropriate for you.

Interest paid on Capital Gain Tax Account

As the account is just like a normal saving account the interest rates are similar as well. If you are using saving account then the interest will be calculated as per the RBI saving interest rates guidelines. If you are opting for fixed deposit account then also the interest rates will be applicable as per the normal fixed deposits rates. Also once the interest amount will be credited to your account, it will come under tax slabs accordingly.

Withdrawal from Capital Gain Tax Account

Though the account looks like a normal saving account, but it is not. Like a normal saving account you cannot withdraw money anytime you want. To withdraw money from this account you need to make an application and also you have to use or reinvest the money within 2 months of withdrawal. Regarding the withdrawal one thing you must know that banks don’t give away any cheque books for this account. As mentioned to withdraw money from this account you need to submit withdrawal forms in your bank’s branch. The unused money, if anything left after withdrawal, must be dropped back in the account within said time.

Things to know

  • This account can be opened by individuals and Hindu Undivided Family members only.
  • You can transfer the account at any time from one branch to another but cannot transfer it to another bank.
  • You can also transfer a part of the amount from savings to fixed deposit accounts or vice versa.
  • Like other savings account, you can have one nominee. For that you need to fill up a form and submit it to your branch.
  • If some of the amount is still left in your account and the given time is expired then the required tax will be levied on the unused amount. The tax rate will be applied as per that very financial year.

Capital Gain Tax Account a glance

Questions Answers
Who can apply? Individual or HUF member
How to apply? Submit a required form and documents in your branch
Type of account Saving and fixed
Penalty on premature withdrawal 1%

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