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Background
On November 19, 2025, the Ministry of Finance notified the Capital Gains Accounts (Second Amendment) Scheme, 2025. This marks an important move towards digitising the capital gains deposit system, and aligning it with the modern banking and payment environment. The amendment updates several parts of the original Capital Gains Accounts Scheme (CGAS), 1988, and aims to make the process more convenient, transparent, and accessible for taxpayers.
Special Economic Zone (SEZ) and Industries: s. 54GA
The amendment begins by expanding the scope of the scheme to include Section 54GA of the Income Tax Act, 1961. This provision deals with capital gains arising from the shifting of an industrial undertaking from an urban area to an SEZ. By bringing this section within the scheme, the government ensures that taxpayers claiming this exemption can also use Capital Gains Accounts for depositing their gains until they are reinvested.
Revised Definition of Deposit Office
Another major change is the revised definition of a "Deposit Office." Earlier, this was limited to specific notified banks. Under the amendment, the definition now includes all branches of the State Bank of India and corresponding new banks under the Banking and Companies Acts. It also covers any banking company defined under the Banking Regulation Act, 1949, so long as it is authorised by the Central Government. This expands the choices available to taxpayers and supports wider implementation across the country.
Evolving Technological Landscape of India
The most significant development is the introduction of electronic modes of payment. Deposits under the scheme can now be made through commonly used methods such as credit and debit cards, net banking, UPI, IMPS, RTGS, NEFT, and BHIM Aadhaar Pay. Earlier, taxpayers largely depended on cheques and demand drafts, which often caused delays. With these changes, the scheme is now fully in line with India's digital payments ecosystem. The amendment also clarifies that the effective date of deposit, irrespective of the mode of payment, will be the date on which the payment is received by the deposit office.
The shift towards digital operations continues in other parts of the amendment. For instance, passbooks are no longer mandatory and taxpayers can now rely on electronic statements of account, reducing paperwork and simplifying access. Similarly, withdrawals can now be made through electronic modes, which helps streamline the process and ensures that digital records form an official part of the account's operation.
One of the most noteworthy features of this amendment is the introduction of electronic closure of accounts. From April 1, 2027, taxpayers will be able to submit closure requests digitally using either a digital signature or an Electronic Verification Code (EVC). The Directorate General of Income Tax has been given the responsibility to set up the procedures for filing the relevant forms, ensuring secure handling of data and maintaining proper archival systems. This move signals a long-term plan to make the entire lifecycle of Capital Gains Accounts digital.
Our Analysis
The Capital Gains Accounts (Second Amendment) Scheme, 2025 brings much-needed modernisation to an old scheme. By including SEZ related exemptions, widening the range of banks, permitting digital deposits and withdrawals, and enabling electronic statements and closures, the government has attempted to create a more efficient and user-friendly system. While taxpayers and banks will need some time to adapt to these changes, the long-term effect is expected to be a smoother, more transparent, and technology-driven process for handling capital gains deposits.
From a business and corporate standpoint, the amendment significantly alters transaction planning for companies, funds and large industry players. The digitalisation of the CGAS reduces friction in deal timelines, particularly in asset transfers, business relocations, and corporate restructurings where Section 54, 54F, 54EC, or 54GA benefits are relevant. Faster deposits and withdrawals through digital modes give corporates greater flexibility in cash flow management, which has historically been a pain point due to manual procedures and delays at designated bank branches.
For industrial undertakings exploring relocation to Special Economic Zones, the express inclusion of Section 54GA provides a clearer compliance pathway and may improve the financial viability of such moves. Companies can now align their reinvestment and capital-redeployment strategies with more predictable timelines since e-statements, real-time tracking and upcoming e-closure mechanisms reduce administrative uncertainty.
Banks and deposit offices will also have to build internal infrastructure for digital onboarding, verification and closure requests. This may create short-term operational adjustments but will ultimately promote standardised processes across institutions, improving ease of doing business. For PE/VC investors, real estate developers, manufacturing companies and corporate groups undertaking divestments or reorganisations, the digitised CGAS framework can contribute to smoother transaction execution and lower compliance overhead.
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