Cost Inflation Index for Long Term Capital Gains (Income Tax)

Benefits of Cost Inflation Index Table

Cost Inflation Index Table will act as a quick guide to find long-term capital gains on the properties. We account for Long-Term Capital Assets at cost price in books. Even though the Market Value of the Assets is going up, the assets are not revalued every year. At the time of Sales, the gain is more due to inflation. To give the benefits of inflation in the Taxation, the Income-Tax Act,1961 brought the concept of Cost Of Inflation Index (CII) to give the advantages of inflation/fluctuation.

NOTIFIED COST INFLATION INDEX UNDER SECTION 48 , EXPLANATION (V)

As per various Income-Tax Notifications, the following table should be used for the Cost Inflation Index Table:-

Current Cost Inflation Index Table

S. NoFinancial YearCost Inflation Index
12021-22317
22020-21301
32019-20289
42018-19280
52017-18272
62016-17264
72015-16254
82014-15240
92013-14220
102012-13200
112011-12184
122010-11167
132009-10148
142008-09137
152007-08129
162006-07122
172005-06117
182004-05113
192003-04109
202002-03105
212001-02100
Latest Notification : New Cost Inflation Index for FY 2021-22/ AY 2022-23 at 317: CBDT Notification No. 73/2021 dt. 15th June 2021

Use and Why is Cost Inflation Index calculated?
Cost Inflation Index (CII) is used to calculate the approximate increase in the prices of assets year-by-year due to inflation under the Income-Tax Act.

Who notifies the cost inflation index?
The Income Tax Department / Central Government specifies the Current Cost Inflation Index by notifying in the official gazette.

Cost Inflation Index = 75% of the average increase in the Consumer Price Index (CPI) for the immediately preceding year.

How to calculate Capital Gain and How is CII used in Income Tax?

To benefit the taxpayers, cost inflation index benefit is applied to the long-term capital assets, due to which asset cost increases, resulting in Lesser Gains and Reduce Tax on Long-Term Capital Gains.

Index Cost of Acquisition = Cost of Purchase of Assets / CII for the purchase year * CII for the Current Year

Who notifies this table for Indexation Benefits?

The Income Tax Department / Central Government specifies the Current Cost Inflation Index by notifying in the official gazette. Any can use this Cost Inflation Index Table Powered By Smart CA.

Cost Inflation Index = 75% of the average increase in the Consumer Price Index (CPI) for the immediately preceding year.

Cash Flows Issues for a Small Business Owners

As you know very much, now every companies are struggling to increase the cash flow for their business. It is like a blood for all business entities. Cost of Inflation Index acts as a Cash Flow Booster to reduce tax burden and will improve better cash flow in the SME and Startup companies.

We are here to support you to improve your cash flow

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