Capital Gains Account Scheme to save tax
Who can benefit from CGAS?
Individuals and members of HUF (Hindu Undivided Family) can benefit from Capital Gains Account scheme (CGAS). Basically, all those taxpayers who want to buy or construct a residential property to save income tax can benefit from CGAS 1988. If any investment with respect to purchase of a property is made within two years from the date of sale of a property, the taxpayer can save on tax on capital gain.
Taxpayers can avail exemptions under the CGAS only when the amount of capital gain, or net consideration, is deposited by the last date for filing the income tax return.
For example: If Mr Sen sells a property for a lump sum amount, also termed as a long-term capital gain, on June 10, 2011, he must invest that amount either in the purchase or construction of a new residential property within two years and three years respectively from the date of sale. If he is not able to buy or construct a property before the last date for filing income tax return, he should deposit the unused amount in CGAS.
In this example, Mr Sen sold his property on
