Closure of Capital Gains Account Scheme

Income Tax Income from Capital Gains
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1

The LTCG on sale of a residential property was invested by me in a Capital Gains Account with a bank and the two-year period for re-investment ends on 31st March 2025. If I am unable to invest in a fresh property by 31.3.2025, I request a clarification to the below matters:

  1. Can I continue to hold onto the funds in the Capital Gains account for further 1 year and try to invest during that period without any loss of LTCG exemption?
  2. If I wish to close at end for FY 24-25, then by when do I need to actually close the Capital Gains Account with the bank- before March 2025 or within certain days of end of FY 24-25? What are the forms and procedures tbe followed with the Bank & Income Tax department for the closure? Do I need to pay only the LTCG Tax or even any interest on it?

Look forward to receiving a clarification. Thanks.

2

Hey @Sandeep

If you are unable to invest the amount in a residential property by 31st March 2025, the capital gains exemption previously claimed will be revoked, and the unutilized amount will be taxed as long-term capital gains in the financial year 2024-25.

You can keep the account open for an additional year if you wish, but you will not be eligible for the exemption since the time limit for claiming it has already expired.

There is no specific deadline for closing the account; you can close it whenever you choose. However, you will need to obtain approval from the jurisdictional income tax officer to do so. Regarding taxation, only the long-term capital gains will be subject to tax.