Want to save Capital Gains Tax on property sales? Kerala-based private banks offer new option

Kochi: Private banks headquartered in Kerala are preparing to introduce an investment scheme that will allow customers to claim exemption from capital gains tax. As many as 19 private sector banks across the country—including Kerala’s Federal Bank, Dhanlaxmi Bank, South Indian Bank and CSB Bank—have now received fresh approval from the Union Finance Ministry to launch this facility.

Under the Capital Gains Accounts Scheme (CGAS), customers will be able to make fixed deposits or savings bank deposits for up to three years. The scheme will be available at all branches except rural branches.

Kerala-based banks are making arrangements to roll out the scheme within the next two to three months. “We are studying the details of the scheme and aim to introduce it at the earliest,” said managing director and CEO of Dhanlaxmi Bank K K Ajith Kumar.

If the profit earned from selling a house, flat or plot is not used to construct or purchase a new house within three years, capital gains tax becomes applicable.

How does CGAS work?

CGAS offers the option to deposit that amount until the new house is purchased or construction is completed, enabling the depositor to claim tax exemption. This also allows investors to earn interest until the new home becomes a reality.

Until now, only public sector banks—including SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank, and IDBI Bank—were permitted to operate Capital Gains Accounts Schemes.