Every year, many taxpayers who claimed exemption under Sections 54 and 54F of the Income-Tax Act, 1961 in earlier assessment years, receive income tax notices because they overlook the three-year rule governing the Capital Gains Account Scheme (CGAS).
A common misconception is that the capital gains tax liability remains deferred until the amount deposited in the Capital Gains Account Scheme (CGAS) is ultimately withdrawn. The Income-Tax Act, 1961, does not support this view.
