Summary
- A significant loophole in Rule 9 of the Capital Gains Accounts Scheme, 1988 allows assessees to withdraw funds without prior proof of investment, effectively postponing capital gains tax.
- Under Section 54(2) and 54F(4), unutilised amounts are taxed only after a three-year period, despite immediate withdrawals.
- This means taxpayers can retain large sums while delaying tax obligations, raising concerns about compliance and potential misuse.
- Experts urge amendments to clarify tax consequences for non-utilisation and streamline bank procedures to prevent confusion among assessees.
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