In a significant move toward digital taxation, India's Ministry of Finance has announced comprehensive updates to the Capital Gains Account Scheme (CGAS), marking the most substantial revision since the scheme's inception in 1988. The Capital Gains Accounts (Second Amendment) Scheme, 2025, issued on November 19, 2025, transforms how taxpayers manage capital gains exemptions.
Digital Transformation of Capital Gains Compliance
The amended scheme introduces electronic payment modes for CGAS deposits, eliminating the previous restriction to cheques and demand drafts. The new "electronic mode" definition includes credit cards, debit cards, net banking, IMPS, UPI, RTGS, NEFT, and BHIM Aadhaar Pay. This change enables instant deposits, particularly benefiting non-resident Indians and remote filers who previously faced delays and clearance issues.
Another critical update clarifies that the effective deposit date is when electronic payment reaches the deposit office along with the application. This eliminates disputes surrounding cheque clearance dates and provides certainty for taxpayers planning their capital gains investments.
Expanded Coverage and Bank Access
The amendment extends CGAS coverage to Section 54GA, which deals with capital gain exemptions for industrial undertakings relocating from urban areas to Special Economic Zones (SEZs). Previously excluded from the CGAS mechanism, businesses undergoing phased relocation now have a streamlined compliance process to safeguard their exemptions.
The definition of "Deposit Office" has been broadened significantly, moving beyond select public sector banks to include State Bank of India, its subsidiaries, all corresponding new banks under banking legislation, and any banking company notified by the Central Government. This expansion potentially opens doors for private banks to operate CGAS accounts, improving accessibility and service quality nationwide.
Mandatory Digital Closure and Modern Documentation
Starting April 1, 2027, CGAS account closures will become mandatory digital processes. Closure requests through Form G (withdrawal) and Form H (utilisation/closure) must be submitted electronically using Digital Signature Certificates or Electronic Verification Codes. The Principal Director General of Income-tax (Systems) will design the digital framework, including routing, approval mechanisms, verification standards, and data security protocols.
The scheme now recognizes electronic account statements as valid documents for deposits, withdrawals, verification, and closure, replacing physical passbooks. Updated forms include fields for online transaction details such as RTGS, IMPS, and NEFT numbers, aligning documentation with modern payment methods.
Practical Impact and Benefits
These reforms address long-standing compliance challenges across different taxpayer segments. Non-resident Indians benefit from reduced paperwork and remote accessibility, while property sellers gain from faster processing and clearer deposit timelines. Businesses relocating to SEZs enjoy a more organized exemption tracking mechanism, and banks operate within a uniform digital compliance environment.
The comprehensive overhaul represents India's continued progression toward a fully digital tax administration ecosystem, aligning with broader visions of seamless taxpayer services. By modernizing deposit methods, expanding applicability, and implementing digital verification, the 2025 amendments create a more transparent and efficient capital gains compliance system for all stakeholders.
