CAPITAL GAINS ACCOUNTS SCHEME-1988, [GSR 724(E), DATED 22-6-1988]

CAPITAL GAINS ACCOUNTS SCHEME, 1988 [GSR 724(E), DATED 22-6-1988]

In exercise of the powers conferred by sub-section (2) of section 54, sub-section (2) of section 54B, sub-section (2) of section 54D, sub-section (4) of section 54F and sub-section (2) of section 54G of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby frames the following Scheme, namely :—

Short title, commencement and application.

1. (1) This Scheme may be called the Capital Gains Accounts Scheme, 1988.

(2) It shall come into force on the date of its publication in the Official Gazette.

(3) It applies to all assessees who are eligible for exemption under section 54, 54B, 54D, 54F or 54G of the Income-tax Act, 1961 (43 of 1961).

Definitions.

2. In this Scheme, unless the context otherwise requires,—

(a) “account” means a deposit account under this Scheme;

(b) “account-A” means deposit account-A mentioned in paragraph 4 of this Scheme;

(c) “account-B” means deposit account-B mentioned in paragraph 4 of this Scheme;

(d) “Act” means the Income-tax Act, 1961 (43 of 1961);

(e) “Deposit Office” means any branch or branch office of the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955) or of a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), or of a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Ac 1980 (40 of 1980), authorised by the Central Government, by notification in the Official Gazette, to receive deposit and maintain account of the depo-sitor, under this Scheme;

(f) “depositor” means an assessee who is eligible to make a deposit under section 54, 54B, 54D, 54F or 54G of this Act;

(g) all other words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act;

(h) “Form” means a form appended to this Scheme.

Deposits how to be made.

3. A deposit or deposits may be made under the provisions of section 54 or section 54B or section 54D or section 54F or section 54G of the Act by any depositor intending to avail of the benefit under the said section or sections of the Act, as the case may be, in accordance with the provisions of this Scheme.

Types of deposits.

4. (1) There shall be two types of deposit accounts,namely :—

(i) “Deposit account-A”; and

(ii) “Deposit account-B”.

(2) The deposit make under account-A shall be in the form of ‘savings deposit’ and subject to the other provisions of this Scheme, withdrawals under this account can be make from time to time by the depositor.

(3) The deposit make under account-B shall be in the form of ‘term deposit’ with an option to the depositor to keep the deposit as cumulative or non-cumulative deposit. Except as provide under paragraph 7 and paragraph 9, withdrawals under this account can be make only after the expiry of the period for which the deposit under this account has been make and accepte.

¹(4) Such deposits may be make in one lump sum or in installment at any time on or before the due date of furnishing the return of income under sub-section (1) of section 139 of the Act as is applicable in the case of the depositor.

Application for opening account.

5. (1) Every depositor who is desirous of opening an account or accounts, as the case may be, under this Scheme for the first time, shall apply to the deposit office in Form A or as near thereto as possible, in duplicate and tender the amount of deposit payable in the manner specified in sub-paragraph (4) and a depositor intending to avail of the benefit under more than one section of the Act, as referred to in paragraph 3, shall make separate applications in the same manner, for opening account or accounts under each of such sections.

(2) While applying under sub-paragraph (1) the depositor shall exercise his option as to whether the amount is to be deposited in account-A or in account-B or in both the accounts, and in case of the depositor exercising his option to open account-B, the depositor shall also exercise his option as to whether the deposit is to be made as cumulative or non-cumulative deposit as referred in sub-paragraph (3) of paragraph 4.

(3) On receipt of an application under sub-paragraph (1), the deposit office shall open an account or accounts in the name of the depositor as opted by him under sub-paragraph (2).

(4) The payment of amount of deposit shall be made by the depositor either in cash or by crossed cheque or by draft along with the application.

(5) Every subsequent deposit shall be made into the deposit office at which the account stands, in the same manner as stipulated in sub-paragraph (4).

(6) If the deposit is made by a cheque or a draft then, subject to such cheque or draft being realised, the effective date of deposit for the purpose of claiming exemption under the Act will be the date on which the cheque or draft is received by the deposit office along with the application under sub-paragraph (1) or sub-paragraph (5), as the case may be.

(7) The interest on the amount of deposit shall accrue and will be calculated subject to the provisions of paragraph 8, with effect from the date of deposit in cash or the date of realisation of the proceeds of the cheque or the draft tendered by the depositor.

(8) In the case of deposit under account-A, the deposit office shall issue a pass book to the depositor wherein all amounts of deposits, withdrawals, together with interest due, shall be entered over the signature of the authorised officer of the deposit office.

(9) In the case of deposit under account-B, deposit office shall issue a deposit receipt wherein the principal amount of deposit, date of deposit, date of maturity of deposit, shall be entered over the signature of the authorised officer of the deposit office.

Issue of duplicate pass book or receipt.

6. In the event of loss or destruction of the pass book receipt referred to in sub- paragraph (8) or sub-paragraph (9) of paragraph 5, the deposit office may, on an application made to it in this behalf, issue a duplicate thereof.

Transfer and conversion of the account.

7. (1) A depositor may, if he so desires, apply for transfer of his account or accounts, from one deposit office to another deposit office of the same bank.

(2) A depositor having a deposit in account-B may, at any time, if he so desires, apply in Form-B or as near thereto as possible, together with his deposit receipt, for transfer of the amount standing to his credit in account-B to his deposit in account-A opened under the same section of the Act under which the said account-B was opened and the request of the depositor may be accepted subject to the other provisions of this Scheme.

(3)(a) A depositor while applying under sub-paragraph (2) shall furnish in Form B the requisite particulars of his account-A to which the amount from account-B is required to be transferred;

(b) Where the depositor is not having a deposit in account-A, he shall state such fact and also make a request for opening an account-A in his name, as specified in Form B.

(4) If the request under sub-paragraph (2) has been made for transfer of amount standing to the credit in account-B, before the expiry of the specified period for which the deposit in account-B was made, such request shall be treated as premature withdrawal of amount from deposit in the said account-B and the amount of interest accrued, if any, in the said account-B shall be calculated by the deposit office in accordance with the provisions of sub-paragraph (4) of para- graph 8.

(5) If the request under sub-paragraph (2). Has been made for transfer of amount standing to the credit in account-B on or after. The expiry of the specified period for which the deposit in account-B was made. The amount of interest accrued in account-B shall be calculated. At normal rate as specified by the Reserve Bank of India. In pursuance of paragraph 8 in respect of a deposit in account-B.

(6) On receipt of an application under sub-paragraph (2). The deposit office shall calculate the amount of interest, if any. Accrued in account-B till the date on which actual transfer of amount to account-A is made. Subject to the provisions of paragraph 8 and close account-B after transferring. The total amount standing to the credit in account-B to account-A:

Provided that where in such case of transfer the depositor does not have a deposit. In account-A, an account-A shall be opened. In the name of the depositor and the amount standing to his credit in account-B. Shall then be transferred to account-A as so opened.

(7) A depositor, if he so desires, may apply in Form B together with his pass book. For opening an account-B in his name, by way of transfer of the whole or any part of the amount standing to his credit in account-A, under the same section of the Act under which his account-A has be open.

(8) After the conversion of account-B to account-A or vice versa in the manner specified above. The interest in newly opened account or accounts, as the case may be, shall accrue with effect from the date of opening of such account or accounts.

Interest.

8. (1) Interest at such rate as may be specify by the Reserve Bank of India. From time to time, shall be allow for each calendar month on the lowest balance at the credit of a depositor under account-A, between the close of the 10th day and the end of the month and shall be credit to the account at the end of each half-year.

(2) Interest at such rate, as may be specify by the Reserve Bank of India. From time to time, shall be allow in respect of deposit in account-B. In case of cumulative deposit in account-B, the amount of interest accrued will be deem to have be reinveste and in case of non-cumulative deposit in account-B, the amount of interest will become due and payable at quarterly intervals.

(3) Interest due at the end of each half year in respect of account-A will be credit only when the amount is Re. 1 or more and the total amount of interest payable in respect of account-A or account-B will be round off to the nearest five paise.

(4) If a depositor applies under paragraph 7 or paragraph 9 or paragraph 13 for conversion. Of the account or withdrawal from the account or closure of the account, as the case may be, before completion of the period for which the deposit in account-B has been accept by the deposit office, the rate of interest payable in respect of such deposit shall be the one applicable to the period for which the deposit remaine with the deposit office less one per cent penalty for a premature withdrawal.

On account of such conversion or withdrawal or closure, as the case may be, and any adjustment require to be make on account of such premature conversion, withdrawal or closure with respect to amount of interest already credit to the account of the depositor, shall be make by the deposit office against the amount lying to the credit of the depositor in account-B.

Withdrawal from the account.

9. (1) A depositor having account-A may, at any time after making the initial subscription, if he so desires, apply in Form C or as near thereto as possible, together with the pass book to the deposit office for the withdrawal of amount from the balance to his credit in account-A, subject to the other provisions of this Scheme.

(2) On receipt of an application under sub-paragraph (1) the deposit office shall, subject to the provisions of sub-paragraph (3), permit the withdrawal and enter the amount withdrawn in the pass book.

(3) At the time of any withdrawal from account-A, other than the initial withdrawal, the depositor shall furnish in Form D in duplicate the details regarding the manner and extent of utilisation of the amount of immediately preceding withdrawal. The deposit office will retain one copy of Form D and return the other copy to the depositor after duly authenticating it.

(4) Where the amount of withdrawal referred to in sub-paragraph (2) exceeds rupees twenty-five thousand, the deposit office shall make payment to the depo-sitor, subject to the fulfilment of the conditions prescribed in sub-paragraph (3), by way of crossed demand draft drawn in favour of the person to whom the depositor intends to make the payment.

(5) A depositor intending to make withdrawal from his deposit in account-B, shall first apply in the manner prescribe in sub-paragraph (2) of paragraph 7 for transfer of the amount standing to his credit in account-B to account-A and may withdraw the requisite amount in the same manner and subject to the same conditions as stipulate in sub-paragraphs (1) and (3) after the amount standing to the credit in his account-B has been credite to his account-A by the deposit office.

(6) In case the application under sub-paragraph (5) is made before the expiry of the specific period for which the deposit in account-B was make, such withdrawal will be treate as premature withdrawal, and the amount of interest accrue, if any, shall be calculate subject to the provisions of sub-paragraph (4) of paragraph 8.

(7) On receipt of the application under sub-paragraph (5), the deposit office shall transfer the amount due and payable, together with the amount of interest accrued, in account-B, to account-A in the same manner and subject to the same conditions as stipulated in paragraph 7 and thereafter allow the request for withdrawal made by the depositor in the same manner and subject to the same conditions as stipulated in sub-paragraphs (1), (2), (3) and (4).

Explanation : For the removal of doubts, it is hereby clarified that the deposit office shall refuse the depositor to withdraw any amount lying in his account, in case of failure on his part to furnish all the details as required by sub-paragraph (3).

Utilisation of the amount of withdrawal.

10. (1) A depositor, withdrawing any amount out of the deposit make in pursuance of sub-section (2) of section 54 or sub-section (2) of section 54B or sub-section (2) of section 54D or sub-section (4) of section 54F or sub-section (2) of section 54G, shall utilise the whole or any part of the amount so withdrawl for the purposes specify in sub-section (1) of the section in relation to which the deposit has be make.

(2) The amount withdrawn shall be utilise by the depositor within sixty days from the date of such withdrawal for the purposes specify in sub-paragraph (1) and the amount or any part there of which has not be so utilise shall be re-deposit in account-A immediately thereafter.

Nomination by the depositor.*

11. (1) A depositor may nominate in Form E or as near thereto as possible, one or more persons but not exceeding three to receive the amount standing to his credit in account-A or account-B, as the case may be, in the event of his death before the amount has become payable or having become payable, has not be pay.

(2) No nominations shall be make in respect of an account open on behalf of a minor or a Hindu undivid family or a firm or a company or an association of persons or a body of individuals.

(3) A nomination make by a depositor may be vary  by a fresh nomination in Form F or as near thereto as possible, by giving notice in writing to the deposit office in which the account stands.

(4) Every nomination and every cancellation or variation there of shall be registere. In the deposit office and shall be effective from the date of such registration. The particulars of which in the case of a deposit. In account-A shall be enter in the pass book and in the case of a deposit in account-B shall be enter. In the deposit receipt issue by the deposit office.

(5) If the nominee is a minor, the depositor may appoint any person. To receive the amount due under the account in the event of the death. Of the depositor during the minority of the nominee.

(6) Where the nomination is in favour of more than one person. The nominee first named shall alone have the right to receive the amount standing to the credit in the account of the deceased depositor.

(7) Where the nominee first name has pre-decease the depositor and the depositor has not cancel. The nomination or substitute the nomination, the nominee second name shall be entitle to receive the amount standing to the credit in the account of the decease depositor and so on in respect of other successive nominees :

Provide that if any nominee is dead. The surviving nominee or nominees shall, in addition to the proof of death of the depositor. Also furnish proof of death of the decease nominee or nominees, as the case may be.

Charge or alienation.

12. The amount standing to the credit of any depositor in any account. Shall not be place or offer by him as security for any loan or guarantee and shall not be charge. Or alienat in any manner whats over.

Closure of the account.

13. (1) If a depositor desires to close his account. An application shall be make with the approval of the Assessing Officer. Who has jurisdiction over the depositor to the deposit office in Form G. As near the ratio as possible, and the deposit office shall pay the amount of balance. Including interest accru, to the credit in the account of the depositor.  By means of crediting such amount to any bank account of the depositor.

(2) If a depositor in respect of whose deposit account a nomination is in force, dies, the nominee. If he desires to close the account or accounts and obtain the payment of the balance standing. To the credit in the account of the deceased depositor, shall make an application. To the deposit office in Form H or as near thereto as possible with. The approval of the Assessing Officer who has jurisdiction over the deceased depositor. And the deposit office shall pay the amount of balance standing. To the credit in the account of the deceased depositor including amount of interest accrued. By means of crediting such amount to any bank account of the nominee.

(3) If a depositor, in respect of whose deposit no nomination is in force. The legal heir of the deceased depositor shall make. An application to the deposit office in Form H or as near thereto as possible. With the approval of the Assessing Officer who has jurisdiction over the deceased depositor. And the deposit office shall pay the balance standing to the credit in the account of the deceased. Depositor including the amount of interest accrued, by means of crediting such amount to any bank account of the legal heir :

Provided that where there are more than one legal heir of the deceased depositor. The legal heir making the claim individually may do so by producing the letter of disclaimer or letter of authorisation from other legal heirs in his favour :

Provided further that before granting the approval for closure of the account under this sub-paragraph. The Assessing Officer shall obtain from the legal heir a succession certificate. Issued under Part V of the Indian Succession Act, 1925, or a probate of the will of the deceased depositor. If any, or letter of administration to the estate of the deceased. In case there is no will in order. To verify the claim of such legal heir to the account of the deceased depositor.

(4) The depositor or the nominee or the legal heir. In order to obtain payment of the amount standing. To the credit in the account shall while applying in Form G or Form H. Also submit the pass book of account-A or deposit receipt of account-B. As the case may be, to the deposit office.

(5) The payment made by the deposit office to the depositor or the nominee or the legal heir. In accordance with the provisions of this paragraph shall constitute. A full discharge to the deposit office of its liability in respect of the deposit.

(6) Nothing contain in this paragraph or in paragraph 11 shall affect the right or claim.  Which any person may have against the person to whom any payment is make under this paragraph.