In a significant update aimed at improving taxpayer convenience and expanding access to capital gains compliance mechanisms, the Ministry of Finance (Department of Revenue), through the Central Board of Direct Taxes (CBDT), issued a notification on November 19, 2025 authorizing additional banks to operate accounts under the Capital Gains Account Scheme, 1988 (CGAS). This move is expected to substantially increase the reach and efficiency of the scheme, making it easier for taxpayers across urban and semi-urban India to comply with capital gains tax exemptions.
Understanding the Capital Gains Account Scheme (CGAS)
The Capital Gains Account Scheme, 1988, allows taxpayers to temporarily park capital gains—arising from the sale of property, land, or other long-term assets—in special designated accounts to avail tax exemptions under provisions such as Section 54, 54F, and 54B of the Income-tax Act. When taxpayers cannot invest the capital gains before the filing due date of their income-tax returns, the CGAS account serves as an interim mechanism to comply with the law.
Until recently, only a limited set of banks were authorized to accept deposits under this scheme. With growing demand and the increasing need for accessible financial infrastructure, the government has now expanded this list.
New Banks Authorized to Operate CGAS Accounts
The latest notification, issued under Clause (e) of Paragraph 2 of CGAS, authorizes all non-rural branches of the following 19 banks to accept deposits and maintain accounts under the scheme:
- HDFC Bank Ltd
- ICICI Bank Ltd
- Axis Bank Ltd
- City Union Bank Ltd
- DCB Bank Ltd
- Federal Bank Ltd
- IDFC FIRST Bank Ltd
- IndusInd Bank Ltd
- Jammu and Kashmir Bank Ltd
- Karnataka Bank Ltd
- Karur Vysya Bank Ltd
- Kotak Mahindra Bank Ltd
- RBL Bank Ltd
- South Indian Bank Ltd
- Yes Bank Ltd
- Dhanlaxmi Bank Ltd
- Bandhan Bank Ltd
- CSB Bank Ltd
- Tamilnad Mercantile Bank Ltd
This expansion significantly widens the network of authorized banks, especially in metro, urban, and semi-urban areas.
Definition of Rural Branch
To avoid ambiguity, the notification clarifies that a rural branch refers to any bank branch located in an area with a population of less than 10,000, as per the 2011 Census. Such branches are excluded from the authorization. This ensures that CGAS operations remain with branches equipped to handle specialized compliance accounts and documentation requirements.
Why This Update Matters for Taxpayers
The widening of the CGAS network addresses several long-standing challenges:
- Greater accessibility: Taxpayers are no longer restricted to a select few banks and can choose from a broader list of private-sector institutions.
- Improved convenience: Urban taxpayers, especially in Tier-2 and Tier-3 cities, gain easier access to CGAS services.
- Faster processing: Banks with advanced digital infrastructure can streamline document handling and account operations.
A Step Toward Better Taxpayer Services
This notification reinforces the government’s ongoing efforts to simplify tax compliance and enhance public access to essential financial instruments. By authorizing more banks under the Capital Gains Account Scheme, CBDT has taken a meaningful step toward taxpayer convenience, transparency, and administrative efficiency.