Indexed Cost of Acquisition shall be calculated in two steps. Calculating the cost of acquisition of capital assets is the first step. CII of the year in which the capital asset is transferred is multiplied by the cost of acquisition and divided by either CII of 2001-02 or CII of the year in which the asset is first held by the assessee. The following notified Cost Inflation Index shall be used to calculate the acquisition cost:
New Cost Inflation Index Table: Check here the latest cost inflation index table.
|Sr.No.||Financial Year||Cost Inflation Index|
Cost Inflation Index From 1981-82 to 2016-17
How to calculate indexed cost of acquisition?
To calculate the indexed cost of acquisition, you have to follow three points as given below.
- Cost of acquisition (Your purchase price of the property)
- Cost Inflation Index of the Previous Year in Which the Asset is Transferred (When Property Sold Out)
- Cost Inflation Index of the year in which the asset was first held by the assessee or. 1.4.1981 (now 1-4-2001 w.e.f. F.Y. 2017-18) (whichever is later)
Now to calculate the indexed cost of acquisition, use the following formula.
Cost of Acquisition (Purchase Price) x CII of the year of transfer / CII of the year acquisition = Indexed cost of acquisition
Example to understand Cost of Inflation Index
- A purchased a plot on 4-1-1978 for Rs.1,00,000/-
- The land was sold by A on 1-6-2016 for Rs.18,00,000/-
- The expenses on transfer were 2% of the sale price
- The market value of the land as on 1-4-1981 was Rs. 1,20,000/-
|Less: Expenses on Transfer||36,000/-|
|Indexed cost of acquisition – 1,20,000 x 1125 / 100 =
|Long-term capital gain||4,14,000/-|
- Updates on 10-04-2023: For the Financial Year 2023-24 (Assessment Year 2024-25), the CBDT has announced that the Cost Inflation Index will be 348, which has been increased from the 331 previously announced. Notification No. 21 /2023/F.No.370142/5/2023-TPL