I wanted to open a bank account under the Capital Gains account scheme but there are 2 plans. I want to know what is different between type A and type B accounts for capital gains account?
Under the Capital Gains account Scheme you have the option to choose between two different account types. The type A- CGAS savings account is just like any other bank saving account. You will get the same rate of interest of your funds as you get for a normal bank savings account. The type B- CGAS account is like a term deposit account. Here your amount if fixed for a period of 3 years starting from the date of transfer. The interest rate fixed for such an account is similar to the rate of interest offered on a fixed deposit. At maturity a type B account can be transferred into an account A type.
Here’s the difference between Type A and Type B accounts in case of Capital Gains Account Scheme (CAGS)
CGAS Type A – Savings Account:
A capital gains savings account is similar to a regular savings account in any bank. The applicable interest rate is also the same as that given on regular savings accounts. You will receive a passbook that has records of all transactions – deposits, interest received, withdrawals – made in the account. The amount deposited in this account will have high liquidity and can be withdrawn at any time.
CGAS Type B – Term Deposit Account:
A capital gains term deposit account is similar to the fixed deposit schemes of banks. The rate of interest and terms surrounding withdrawal before maturity also remains the same as the bank’s FD scheme. So if you withdraw the amount in this account before the end of the tenure you may have to pay a premature withdrawal penalty, depending on the terms of the bank. You will receive a deposit receipt that specifies the principal deposited, date of deposit, date of maturity and the interest rate. This account also offers cumulative and non-cumulative options. In the cumulative option, the interest amount is added to the term deposit and reinvested, thereby adding to the total interest accrued. The non-cumulative scheme, on the other hand, allows you to withdraw or receive the interest at regular intervals – quarterly, half-yearly or annually.
The tenure of a Type B account is a maximum of 36 months (3 years) if you are constructing a house, and 24 months (2 years) if you plan to buy a ready house.
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