Cost Inflation Index Table for 2020-21

Benefits of Cost Inflation Index Table

Cost Inflation Index Table will act like a quick guide to find long-term capital gains on the properties. We account Long-Term Capital Assets at cost price in books. Even though Market Value of the Assets are 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, following table should be used for the Cost Inflation Index Table :-

Current Cost Inflation Index Table

S. NoFinancial YearCost Inflation Index
12020-21301
22019-20289
32018-19280
42017-18272
52016-17264
62015-16254
72014-15240
82013-14220
92012-13200
102011-12184
112010-11167
122009-10148
132008-09137
142007-08129
152006-07122
162005-06117
172004-05113
182003-04109
192002-03105
202001-02100
Latest Notification : New Cost Inflation Index for FY 2020-21/ AY 2021-22 at 301: CBDT Notification No. 32/2020 dt. 12 June 2020

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

Call Us 93808-02000 or Visit https://smartca.org

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