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Cost Inflation Index for FY 2023-24
An overview of the cost inflation rate for the FY 2023–24
In this post, we will discuss Cost Inflation Index for Long Term Capital Gains in FY 2023-24.
But first, we will take a look at what the cost inflation index is and why it is important.
Meaning of Cost Inflation Index (CII)
The cost inflation index (CII) is a way of measuring inflation. It is used in the computation of long-term capital gains earned from the sale of assets. CII use Consumer Price Index (CPI) to calculate inflation, and it helps reduce the amount of tax payable on long-term capital gains.
Since the price of a capital asset usually increases in between the years of purchase and sale, selling the asset would net the owner a significant amount.
Thus, the government levies tax on such transactions, the owner would have to pay heavy tax on these transactions.
In order to reduce tax, the asset’s selling price is indexed to consider the asset’s current value, taking into consideration the inflation reducing its value. So, the profit from the sale is less and thus reducing the payable capital gains. The purchase price is referred to as the indexed cost of acquisition, and the cost inflation index (CII), is the indexed price that the asset is purchased.
You can calculate CII on the official Income Tax website- Cost Inflation Index
Note: The Indian government fixes CII for a particular year and released it before the end of the accounting year.
Cost of Inflation Index till FY 2022-23 or AY 2023-24
You can see the list of Cost Inflation Index (CII) for Long Term Capital Gains for recent years.
|
Financial Year |
Cost Inflation Index |
|
2001-02 |
100 |
|
2002-03 |
105 |
|
2003-04 |
109 |
|
2004-05 |
113 |
|
2005-06 |
117 |
|
2006-07 |
122 |
|
2007-08 |
129 |
|
2008-09 |
137 |
|
2009-10 |
148 |
|
2010-11 |
167 |
|
2011-12 |
184 |
|
2012-13 |
200 |
|
2013-14 |
220 |
|
2014-15 |
240 |
|
2015-16 |
254 |
|
2016-17 |
264 |
|
2017-18 |
272 |
|
2018-19 |
280 |
|
2019-20 |
289 |
|
2020-21 |
301 |
|
2021-22 |
317 |
|
2022-23 |
331 |
|
2023-24 |
348 |
Note:
- The CBDT changed the base year from 1981 to 2001. So FY 2001-02 is taken as the base year for calculation.
Download the Cost Inflation Index PDF by clicking here
How is CII Useful?
The indexing helps you to save a large amount of Income Tax levied on the long-term capital gain. But, it is not available for short-term capital gain/losses or Non-Resident Indians.
Indexing is only available if you meet the following:
- The cost of acquisition of the asset has to be multiplied by the cost of inflation of the year it was transferred.
- That figure is to be divided by the CII for the year in which you acquired the asset.
- If the asset was purchased before 1981, the CII of the year 1981 is taken into consideration.
- If you have made improvements to the asset, then you need to adjust the cost inflation index by multiplying with the CII of the year the improvement was made.
With that, we have come to the end of this post.
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