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I want to close my capital gain account. The capital gain amount is already disbursed and only interest is lying in account. The branch manager asked for Form G with AO’s endorsement on it. How to get it? Please advise procedure?
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer's (AO) endorsement, here’s the step-by-step guide to get it: Step 1: Prepare Form G Form G iRead more
Closing a Capital Gains Account Scheme (CGAS) account requires following the proper procedure, especially when only interest remains. Since your branch manager has requested Form G with the Assessing Officer’s (AO) endorsement, here’s the step-by-step guide to get it:
Step 1: Prepare Form G
Form G is the prescribed form under the Capital Gains Accounts Scheme, 1988, for closing the account and withdrawing the remaining funds. You need to fill out the form with:
✅ Your personal details (Name, PAN, Address, Account No.)
✅ Bank details where the capital gain account is held
✅ Reason for closure (In your case, only interest remains)
✅ Details of amount already disbursed and remaining balance
Step 2: Approach Your Jurisdictional Assessing Officer (AO)
Find out who your AO is by checking the Income Tax Department’s e-filing portal https://www.incometax.gov.in.
Visit the AO’s office with:
📄 Duly filled Form G
📄 Passbook/Statement of your CGAS account
📄 Copy of PAN Card
📄 Copy of Last ITR filed
📄 Bank’s request letter (if any)
Step 3: Obtain AO’s Endorsement
Submit Form G along with documents to the AO.
The AO will verify whether the capital gain amount was utilized as per the exemption rules.
If satisfied, they will endorse and sign Form G, permitting closure.
Step 4: Submit to the Bank
After getting AO’s approval, submit the endorsed Form G to your bank.
The bank will process the closure and release the remaining interest amount (after TDS deduction, if applicable).
Ensure you take the final statement from the bank for your records.
Key Points to Note
✔️ Timelines may vary depending on AO’s workload, so follow up if needed.
✔️ Interest earned is taxable as per your income slab.
✔️ If you face delays, you may escalate the matter with your jurisdictional Principal Commissioner of Income Tax (PCIT).
Once done, your Capital Gains Account will be officially closed, and you can use the interest as per your requirement. ✅
See lessWhether interest received on amount deposited in capital gain account under capital gain account scheme is taxable?
Yes, the interest earned on amounts deposited in a Capital Gains Account under the Capital Gains Account Scheme (CGAS) is taxable. This interest income is subject to tax in the year it accrues, irrespective of whether the funds are withdrawn. Tax Deducted at Source (TDS) is applicable to this interRead more
Yes, the interest earned on amounts deposited in a Capital Gains Account under the Capital Gains Account Scheme (CGAS) is taxable. This interest income is subject to tax in the year it accrues, irrespective of whether the funds are withdrawn. Tax Deducted at Source (TDS) is applicable to this interest, and the depositor receives a TDS certificate for the amount deducted
See lessWhich Form is to be filed for withdrawal from Capital Gain Account?
When you deposit your capital gains into a Capital Gains Account Scheme (CGAS) to claim an exemption under sections like 54, 54F, or 54EC, you may later need to withdraw funds from this account when you actually make the required investment. Key Point:There is no distinct, numbered form prescribed iRead more
When you deposit your capital gains into a Capital Gains Account Scheme (CGAS) to claim an exemption under sections like 54, 54F, or 54EC, you may later need to withdraw funds from this account when you actually make the required investment.
Key Point:
There is no distinct, numbered form prescribed in the Income Tax Act specifically for the withdrawal of funds from a Capital Gains Account. Instead, the process is carried out online.
How It Works:
Online Application:
You are required to log in to the official Income Tax e-filing portal where the Capital Gains Account Scheme is managed.
Within this online module, you will find an option to submit a withdrawal request.
You need to furnish the necessary details, such as the amount you intend to withdraw and the purpose of the withdrawal (for example, for acquiring a new asset to claim an exemption).
Supporting Documents:
Along with your online request, you must upload or submit the relevant documents, such as evidence of the intended investment. This ensures that the withdrawal is used in accordance with the provisions of the Act.
Approval Process:
Once your request is submitted, the authorities will process it. On approval, the funds will be released from the Capital Gains Account and can be used to make the qualifying investment.
Bottom Line:
There isn’t a separate “Form 10D” or similar for withdrawing funds. Instead, you complete a withdrawal application through the online Capital Gains Account Scheme portal on the Income Tax e-filing website. This streamlined process is designed to facilitate the smooth utilization of your capital gains for eligible investments.
See lessHow depreciation as per Income Tax is calculated?
Depreciation allows you to spread the cost of a capital asset over its useful life. Under the Income Tax Act, this deduction is primarily governed by Section 32, and the most common method used is the Written Down Value (WDV) method. Here’s a straightforward guide on how to calculate it: Step 1: DetRead more
Depreciation allows you to spread the cost of a capital asset over its useful life. Under the Income Tax Act, this deduction is primarily governed by Section 32, and the most common method used is the Written Down Value (WDV) method. Here’s a straightforward guide on how to calculate it:
Step 1: Determine the Cost of Acquisition
Starting Point:
Begin with the purchase price of the asset. Add any incidental expenses (like installation, transportation, and registration fees) that are directly attributable to acquiring the asset. This gives you the asset’s total cost.
Step 2: Classify the Asset
Type of Asset:
Assets are generally classified as tangible (buildings, machinery, vehicles) or intangible (patents, copyrights).
Depreciable vs. Non-Depreciable:
Note that certain assets, such as land and goodwill (as per current provisions), are not eligible for depreciation.
Step 3: Choose the Appropriate Depreciation Method
Written Down Value (WDV) Method:
Under this method, depreciation is calculated on the remaining value of the asset after deducting depreciation claimed in previous years.
Calculation for the Year:
Depreciation=(Cost of Asset−Accumulated Depreciation)×Prescribed Rate\text{Depreciation} = (\text{Cost of Asset} – \text{Accumulated Depreciation}) \times \text{Prescribed Rate}Depreciation=(Cost of Asset−Accumulated Depreciation)×Prescribed Rate
Straight-Line Method (SLM):
In certain cases (like some power generation undertakings), the Straight-Line Method is applicable, where depreciation is spread evenly over the asset’s useful life.
Step 4: Apply the Prescribed Depreciation Rate
Rate Determination:
The Income Tax Act specifies different rates for various types of assets. For example, buildings, machinery, and computers each have their own rates.
Example:
If a machine costs ₹10 lakh and the prescribed rate is 15% under the WDV method, the first year’s depreciation would be:
₹10,00,000×15%=₹1,50,000₹10,00,000 \times 15\% = ₹1,50,000₹10,00,000×15%=₹1,50,000
The Written Down Value at the end of the first year would then be:
₹10,00,000−₹1,50,000=₹8,50,000₹10,00,000 – ₹1,50,000 = ₹8,50,000₹10,00,000−₹1,50,000=₹8,50,000
In the second year, you’d calculate depreciation on ₹8,50,000 using the same rate.
Step 5: Record and Carry Forward
Documentation:
Maintain detailed records of the asset’s cost, the depreciation claimed each year, and the resulting Written Down Value.
Continuity:
These records ensure that the depreciation is correctly calculated over the asset’s useful life and help in future tax assessments.
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Whether deduction of depreciation is allowed on building taken on lease?
Under the Income Tax Act, depreciation is generally available only on assets that you own. Here's how this rule applies to a building taken on lease: Operating Lease:If you lease a building under an operating lease, the building remains the property of the lessor. Result: No depreciation can be claiRead more
Under the Income Tax Act, depreciation is generally available only on assets that you own. Here’s how this rule applies to a building taken on lease:
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See lessOperating Lease:
If you lease a building under an operating lease, the building remains the property of the lessor.
Result: No depreciation can be claimed on the building itself since you do not own it.
Finance Lease:
In cases where the lease arrangement qualifies as a finance lease, the lessee is treated, for tax purposes, as the owner of the asset.
Result: You may be eligible to claim depreciation on the leased building.
Leasehold Improvements:
Even with an operating lease, if you incur expenses to improve the leased premises (and these improvements are capitalized as assets), you may claim depreciation on those improvements.
What is block of assets as per Income Tax Act?
In simple terms, a block of assets is a grouping of similar assets that are used for the same business purpose, on which depreciation is calculated collectively rather than individually. This concept is crucial for ensuring a uniform method of depreciation and avoiding the cumbersome process of calcRead more
In simple terms, a block of assets is a grouping of similar assets that are used for the same business purpose, on which depreciation is calculated collectively rather than individually. This concept is crucial for ensuring a uniform method of depreciation and avoiding the cumbersome process of calculating depreciation for each asset separately.
Key Points:
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See lessDefinition & Purpose:
The Income Tax Act, 1961 (particularly under Section 32) groups together assets that are similar in nature and use, such as all machinery, all computers, or all vehicles used in a business, into what is called a block of assets.
This approach simplifies the calculation of depreciation by applying the same depreciation rate to the entire group.
How It Works:
Cost Accumulation: The cost of all assets in a block is combined.
Depreciation Calculation: Depreciation is then computed on the entire block’s cost, and the written down value is carried forward from one year to the next for the entire block.
Adjustments: When new assets are added or old assets are disposed of, the block’s cost is adjusted accordingly.
Benefits:
Simplification: This method reduces administrative burden, especially for businesses with a large number of similar assets.
Uniformity: It ensures consistency in how depreciation is claimed over time.
How to calculate WDV of an assets as per Income Tax Act?
When calculating depreciation for tax purposes, the Written Down Value (WDV) method is commonly used. This method allows you to claim depreciation on an asset based on its reduced value after accounting for previous depreciation. Step-by-Step Calculation: Determine the Cost of Acquisition: Begin witRead more
When calculating depreciation for tax purposes, the Written Down Value (WDV) method is commonly used. This method allows you to claim depreciation on an asset based on its reduced value after accounting for previous depreciation.
Step-by-Step Calculation:
Determine the Cost of Acquisition:
Begin with the actual purchase price of the asset plus any incidental costs (such as installation, transportation, etc.).
This initial cost is your base cost for depreciation.
Calculate Depreciation for the Year:
Use the prescribed rate for the asset as defined under the Income Tax Act (refer to Section 32 for specific rates).
Depreciation for the Year = (Base Cost – Accumulated Depreciation) × Applicable Rate
Compute the WDV:
WDV at the End of the Year = (Cost of Acquisition) – (Total Depreciation Claimed to Date)
In simpler terms, the WDV is the original cost reduced by all the depreciation deductions that have been allowed in the previous years.
Example Illustration:
Suppose you purchase machinery for ₹10,00,000. The applicable depreciation rate for the machinery is 15% per annum.
First Year Depreciation:
Depreciation = ₹10,00,000 × 15% = ₹1,50,000
WDV at end of Year 1 = ₹10,00,000 – ₹1,50,000 = ₹8,50,000
Second Year Depreciation:
Depreciation = ₹8,50,000 × 15% = ₹1,27,500
WDV at end of Year 2 = ₹8,50,000 – ₹1,27,500 = ₹7,22,500
This process continues each year until the asset is fully depreciated or disposed of.
See less