All about cost inflation index FY 2023-24 (AY 2024-25)
Cost inflation index It is employed to calculate the indexed cost of acquisition. Cost inflation index FY 2023-24 (AY 2024-25) is 331. This post contains information about cost inflation index and cost inflation index FY 2023-24. Cost inflation index is used for calculation of Long term capital gain tax india.
What is the cost inflation index explain with an example
The Cost Inflation Index (CII) is a measure used to adjust the purchase price of assets for inflation over time. It is crucial for determining the long term capital gain tax India.
For example, let’s say you purchased a property in India in the year 2010 for Rs. 50 lakhs. Now, you plan to sell it in 2022. To calculate the capital gains tax, you need to adjust the acquisition cost for inflation using the CII.
Suppose the CII for the year 2010-11 was 167, and for the year 2022-23, it is 317. To determine the indexed cost of acquisition, you would multiply the original purchase price (Rs. 50 lakhs) by the ratio of the CII for the year of sale (2022-23) and the CII for the year of purchase (2010-11):
Indexed Cost of Acquisition = (Purchase Price) x (CII for the year of sale) / (CII for the year of purchase)
= Rs. 50 lakh x 317 / 167
= Rs. 94.61 lakh
The indexed cost of acquisition (Rs. 94.61 lakhs) will be used to calculate the capital gains tax liability instead of the original purchase price
Cost Inflation Index in India from Financial Year 2001-02 to Financial Year 2022-23
Section 55 of the Income Tax Act of 1961 was amended by the Finance Act of 2017 to provide that the cost of an asset acquired before 01.04.2001 shall be allowed to be taken as fair market value as of 01.04.2001 and that the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001 in order to revise the base year for computation of capital gains. According to CBDT Notification No. 44/2017, dated June 5, 2017, the cost inflation index for long-term capital assets sold after April 1, 2017.Below is table for cost inflation index FY 2023-24 or cost inflation index for long term capital gain.
|
SI. No. |
Financial Year |
Cost Inflation Index |
|
1 |
2001-02 |
100 |
|
2 |
2002-03 |
105 |
|
3 |
2003-04 |
109 |
|
4 |
2004-05 |
113 |
|
5 |
2005-06 |
117 |
|
6 |
2006-07 |
122 |
|
7 |
2007-08 |
129 |
|
8 |
2008-09 |
137 |
|
9 |
2009-10 |
148 |
|
10 |
2010-11 |
167 |
|
11 |
2011-12 |
184 |
|
12 |
2012-13 |
200 |
|
13 |
2013-14 |
220 |
|
14 |
2014-15 |
240 |
|
15 |
2015-16 |
254 |
|
16 |
2016-17 |
264 |
|
17 |
2017-18 |
272 |
|
18 |
2018-19 |
280 |
|
19 |
2019-20 |
289 |
|
20 |
2020-21 |
301 |
|
21 |
2021-22 |
317 |
|
22 |
2022-23 |
331 |
|
23 |
2023-24 |
348 |
In India, the CII is used to calculate long-term capital gains tax. When an asset is sold after being held for longer than a predetermined amount of time, long-term capital gains result. Prior to the beginning of a financial year, the CBDT releases the CII for that particular financial year.
India’s Cost Inflation Index (CII). In order to calculate inflation and the long-term capital gains obtained from the sale of an asset, the Cost Inflation Index employs the CPI. The tax owed on long-term capital gains is decreased by taking inflation into account.
Eight categories make up the CPI: education, communication, transportation, leisure, attire, food and drink, housing, and medical care. The National Statistical Office (NSO), which is part of the Ministry of Statistics and Programme Implementation, releases the CPI.
Owner of this information can be reached at K M GATECHA & CO LLP.
Important note: This does not lead to legal advice or legal opinion and is personal view and for information purpose only. It is prepared on the basis of facts available and applicable law.It is suggested to go through applicable provisions of law,latest regulations,judicial announcements, circulars, notifications and clarifications etc before taking any action based on above content.You agree here by that for any action taken on basis of above information in any manner writer or K M GATECHA & CO LLP is not responsible or liable for any omission,reliability,accuracy,completeness,errors or authenticity.This work by professional is just for knowledge purpose and does not constitute any kind of solicitation of work or advertisement.
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