The government has recently notified a major overhaul of the Capital Gains Accounts Scheme (CGAS), introducing significant changes aimed at modernizing the tax system and easing compliance for taxpayers. The Capital Gains Accounts (Second Amendment) Scheme, 2025, effective immediately from November 19, 2025, brings electronic payments, digital documentation, and online account management to the forefront.

One of the most significant changes is the expansion of access to CGAS accounts to include 19 private sector banks. Previously, the scheme was largely limited to branches of the State Bank of India and a few notified banks. Now, any banking company as defined under the Banking Regulation Act, 1949 — if specifically authorized by the Central government — can act as a Deposit Office. This expansion is expected to benefit small property sellers, especially in smaller cities, who may not have had easy access to designated banks. The private banks now included are HDFC Bank, ICICI Bank, Axis Bank, and South Indian Bank, among others.

The amendment also brings in new digital payment options for deposits into CGAS accounts. Taxpayers can now deposit capital gains using credit cards, debit cards, net banking, UPI, IMPS, RTGS, NEFT, and BHIM Aadhaar Pay. This reduces the need for physical visits to banks and speeds up the process, helping taxpayers meet strict timelines under Section 54 and other exemption sections. The effective date for claiming exemptions under Sections 54 to 54GB will now be the date the deposit office receives the electronic payment. This clarification helps prevent disputes and ensures smoother processing of tax exemption claims.

Furthermore, the new rules bring significant updates to documentation and account statements. The scheme now formally recognizes electronic account statements, placing them on par with physical passbooks for withdrawals, verification, and updates. Forms used for opening, operating, and withdrawing funds from CGAS accounts have been updated to include fields for electronic transactions such as RTGS/IMPS/NEFT numbers.

In a major procedural shift, CGAS accounts must be closed entirely through electronic filing from April 1, 2027. Account closures will require authentication using either a digital signature or an Electronic Verification Code (EVC). The Income-tax Department's Systems Directorate has been empowered to specify the filing procedures, the architecture of the EVC system, and secure archival norms. This move is expected to reduce branch visits, speed up closures, and provide faster access to funds after completing reinvestments.

The amendment also extends the scope of CGAS by including deposits made to claim exemptions under Section 54GA, which covers capital gains arising from shifting an industrial undertaking from an urban area to a Special Economic Zone (SEZ).

Experts believe that these changes will modernize the way taxpayers avail capital gains exemptions. The reforms take effect immediately, except for the e-closure mandate, which is slated for 2027, giving banks and taxpayers time to transition. Overall, the revamped CGAS framework aims to provide taxpayers with a more efficient, accessible, and streamlined way to manage capital gains during reinvestment.