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Base year for Cost inflation index has been changed by the CBDT

Cost inflation index changed

June 8, 2017

The cost inflation index (CII) is a way of measuring inflation and is used in the computation of long-term capital gains w.r.t the sale of assets. Since the price of a capital asset likely increases in between the years of purchase and sale, selling the asset would net the owner a significant amount. 

Since the government levies tax on such transactions, the owner would have to pay a considerable amount as tax on these transactions.  

In order to reduce the amount of tax, the selling price of the asset can be indexed so as to consider the asset’s current value, taking into consideration the inflation reducing its value. This way, the profit derived from the sale would be lower, thus reducing the capital gains payable.  

The New Cost Inflation Index for financial year 2017-18 is 272. This year, the CBDT has also changed the base year from 1981 to 2001. So currently, 2001-02 will be taken as the base year for calculation. In the below table, the new indices are specified. 

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 

 

 The notification from CBDT on change of Cost Inflation Index and the Notification of the rates

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