Cost inflation index for fy 2022-23

The Income Tax Department has notified the cost inflation index for the current fiscal to calculate long-term capital gains arising from the sale of immovable property, securities, and jewellery. The cost inflation index (CII) is used by a taxpayer to compute gains arising out of the sale of capital assets after adjusting for inflation. ''For the last couple of years, the inflation index has been rising faster, which depicts the mounting inflation in the country,'' Mohan added. AKM Global Head of Tax Markets Yeeshu Sehgal said the CII will be beneficial to taxpayers as assets, which are held for long term, are recorded at purchase cost despite increasing inflation ''It is very important to adjust the said purchase cost with the new cost inflation index notified as 331 due to which the capital gains tax can be reasonably and fairly calculated,'' Sehgal said. CII or Cost Inflation Index is notified under the Income-tax Act, 1961, every year. It is popularly used to calculate the ''indexed cost of acquisition'' while calculating capital gains at the time of sale of any capital asset. Normally, an asset is required to be retained for more than 36 months (24 months for immovable property and unlisted shares, 12 months for listed securities) to qualify as long-term capital gains. Since the prices of goods increase over time resulting in a fall in the purchasing power, the CII is used to arrive at the inflation-adjusted purchasing price of assets to compute taxable long-term capi...

Introduction What is Cost Inflation Index? The Cost Inflation Index is a measure of inflation that is used to calculate the inflation-adjusted purchase price of an asset. It is a tool that helps taxpayers determine the capital gains tax they need to pay while selling an asset. In other words, it helps taxpayers adjust the purchase price of an asset for inflation when calculating capital gains. The Cost Inflation Index is utilized to adjust prices for the effects of inflation. In essence, as the inflation rate increases over time, prices will also increase. The Cost Inflation Index (CII) aids in estimating the yearly rise in prices of goods and assets due to inflation. Over time, the cost of a product tends to rise, resulting in a reduction in the purchasing power of money. For example, if 15 items can be purchased for Rs. 30 today, tomorrow the same amount may only be able to buy 10 items due to inflation. CII for the FY 2022-23 The government of India via Central Board of Direct Taxes has recently announced the How to calculate the Cost Inflation Index? The variation in the number of CII holds significance as it is utilized to determine the inflation-adjusted purchasing value of assets, which ultimately impacts long-term capital gains. The Cost Inflation Index (CII) is calculated by dividing the CII for the year the asset was sold or transferred by the CII for the year the asset was acquired or bought. Assuming you bought a house for Rs. 50 lakhs in May 2005 and sold it f...

• What is Cost Inflation Index (CII)? • What is Base Year for CII? • How to Calculate Cost Inflation Index? • Cost Inflation Index Table • How is Cost Inflation Index Useful in Reducing Tax? • How to Apply Indexation for Long-Term Capital Assets? • Things to Keep in Mind About CII in India • Frequently Asked Questions What is Cost Inflation Index (CII)? In general, as inflation rises, so do the prices of goods. As a result, the purchasing power of money falls. For example, if you can buy ten units of some products for Rs. 1,000 today, you may only be able to buy eight units in two years due to inflation. Cost Inflation Index in relation to a particular previous year means an index notified by the Central Government. It is regarding a 75% of average rise in the Consumer Price Index (Urban) for the immediately preceding previous year to such a previous year. With regard to taxation, CII could assist investors in minimising their capital gains arising from the sale of long-term capital assets. As the cost of acquisition increases, the Purpose of Cost Inflation Index The Cost Inflation Index (CII) calculates the annual increase in the prices of goods and assets due to What is Base Year for CII? The cost inflation index’s base year is the first year which is 1981. The year 1981 has an index value of 100. In order to determine the percentage increase in inflation, compare the index of all subsequent years to the base year. If the asset’s purchase date is before the base year the...

“This notification shall come into force with effect from the 1st day of April 2024 and shall, accordingly, apply in relation to the assessment year 2024-25 and subsequent assessment years” According to the Central Board of Direct Taxes (CBDT) notification. Cost Inflation index is used for calculating long-term capital gains arising from sale of immovable property, securities and jewellery after adjusting inflation when they file income tax returns (ITR) next year. The Income Tax Department has notified the Cost Inflation Index for the current fiscal beginning April 2023, for calculating long-term capital gains arising from sale of immovable property, securities and jewellery. The Cost Inflation Index (CII) is used by taxpayers to compute gains arising out of sale of capital assets after adjusting inflation. The income tax department has notified the cost inflation index (CII) number for the current FY. CII number is used to arrive at the inflation-adjusted price of an asset. The capital gains that are chargeable to income tax are lowered using the indexation benefit. From FY 2023-24, the indexation benefit has been removed from debt mutual funds. Cost Inflation Index is notified under the Income-tax Act, 1961, every year. It is popularly used to calculate the "indexed cost of acquisition" while calculating capital gains at the time of sale of any capital asset. Normally, an asset is required to be retained for more than 36 months (24 months for immovable property and unli...

Updated on: 19.06.2022. Cost Inflation Index number is referred to while calculating the Indexed cost of acquisition of a capital asset, which further helps in calculation of the long-term capital gains tax. The complete process is called as Indexation, where the cost price of a capital asset is adjusted with the impact of Inflation using the cost Inflation Index number, which is announced by the Central government every financial year. This post is to explain the indexation process and how does cost inflation index number helps in calculate long-term capital gains tax. Since this is a bit technical thing, but I have tried to simplify it the maximum I can. If you still have some doubt, please feel free to write in the comments section below the post. What is Cost Inflation Index / Capital gain Index? Cost Inflation Index or as some people call it Capital gain Index is announced by the central government for every financial year, after referring to the CPI (Consumer Price Index) for the immediately preceding year. In simple language, Cost Inflation index factors in the change of inflation in capital assets year on year. While calculating long-term Capital gains tax government has allowed adjusting the cost price of the capital asset with the inflation numbers through Cost Inflation Index, and come up with the Indexed cost of acquisition of that capital asset. Now to calculate the actual gain, one has to deduct the indexed cost of acquisition rather than the original cost of...

The price of commodities rises over time, reducing the purchasing power of money, which is the number of commodities that can be purchased in one currency. If you could buy two units for 100 rupees today, you may only be able to buy 1 unit for 100 rupees tomorrow due to inflation. The Cost Inflation Index (CII) estimates the annual rise in prices of goods and assets due to the inflation factor. What is the Cost Inflation Index? The world economy is dynamic and can change constantly. This change is reflected in the decline in purchasing power of money due to the sustained rise in prices of goods and services. The phenomenon of monetary depreciation that leads to higher personal living expenses is known as inflation. The Cost Inflation Index or CII is a tool used to calculate an estimated annual rise in asset prices due to inflation. The central government has set this indicator and published it in the official bulletin for measuring inflation. This index, reported annually by the Government, is defined in Section 48 of the Income Tax Act of 1961. Nowadays, there are lots of cost inflation index calculators available online. How is the Cost Inflation Index Calculated? The asset’s price during the time of buying is indexed by the cost inflation index. Cost Inflation Index = CII during the time asset was sold / CII during the time asset is acquired. Example: An individual bought a property for Rs. 20 lakhs in the year 2000; in 2009, he sold it for Rs. 35 lakhs. The profit made...