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Deposit amount becomes taxable under Capital Gains Account Scheme

The CGA Scheme provides for drawing the amount for application for purchase or construction of a residential property on a declaration given by the account holder. The amount is bound to be returned at the end of three years, if it is not drawn for the purpose for which it was so deposited. It becomes taxable in the year of withdrawal. It should be possible for a person to withdraw the amount even before the three year period, when he understands that he will not be able to avail himself of the benefit. If he then seeks to close the account, it can be done only with the approval of the assessing officer as provided in Clause 13 of the Scheme on application in Form G available in the annexure to the Scheme. The amount can then be withdrawn on deposit of Form G with the bank with consequent liability for capital gains tax.

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