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 2001-02, to 2019-20.
Cost inflation index chart ( CII) – FY 2001-02 to 2019-20:
|Financial Year||Cost Inflation Index (CII)|
|2001-02 (Base year)||100|
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. 10,0000 in the year 2011-12. He sold the plot in the financial year 2018-19 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. 820000
Indexed cost = purchase price/ cost inflation index for year of purchase * CII for year of sale
= 10,0000/184*280 = Rs. 152170
Capital gain = Rs. 667830
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 2001?
When property has purchased before 2001, fair market value of property on 1/4/1981 should be computed and CII of 2001 – 100 should be considered to compute indexed cost of acquisition.
Suppose land was purchased in 1999 for Rs. 45000. It is sold in financial year 2018-19 for 12,00,000. Fair market value on 1/4/01 is 55000. In this case, we compute long term capital gain as per following.
Indexed cost = 55000/100*280 = 154000
Sale value = 12,00,000
Capital gain = 10,46,000
Note: To compute capital gain, fair market value as on 1/4/2001 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)
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