Cost inflation index ( capital gain index ) is useful to calculate long term capital gain. Indexation can help you to save long term capital gain.Here I present table of index for financial year 2014-15, 2015-16 and last 23 years.
Cost inflation index chart / capital gain index chart for past 24 years:
|Financial Year||Cost inflation index|
Cost inflation index for financial year 2015-16 ( AY 2016-17) is 1081.
How to use index chart?
The index is for particular year. The year when transaction actually takes place. We can increase past cost by using cost inflation index.
Example for use of index:
Suppose Mr. A purchased plot at Rs. 10,000 in the year 2001-02. He sold the plot in the financial year 2014-15 for Rs. 3,00,000.
Gain: gain is long term because asset is held for more than 36 months. So we can use index table.
Capital gain = sale value less indexed cost of acquisition.
sale value = Rs. 3,00,000
Indexed cost = purchase price/ cost inflation index for year of purchase * CII for year of sale
= 10,000/426*1024 = Rs. 24037
Capital gain = Rs. 275963.
Who notified capital gain index?
It is notified by central government every year with regards to 75% of CPI for urban non manual employees for the previous year.
Cost inflation index for properties purchased before 1981?
When property has purchased before 1981, fair market value of property on 1/4/1981 should be computed and CII of 1981 – 100 should be considered to compute indexed cost of acquisition.
Suppose land was purchased in 1976 for Rs. 12000. It is sold in financial year 2013-14 for 12,00,000. Fair market value on 1/4/81 is 22000. In this case, we compute long term capital gain as per following.
|Less Indexed purchase value||22000/100*939||2,06,580|
|Long term capital gain||993420|
Note: To compute capital gain, fair market value as on 1/4/1981 or actual purchase value, whichever is more can be considered for cost of acquisition.
(You can download utility of income tax from our site or income tax website)
I hope you the cost inflation index chart helps you to calculate capital gain. You can also download the pdf of cost inflation index chart by clicking print button.