1 / 5

taxguru.in-Cost Inflation Index Meaning amp Index from 1981-82 to 2021-22-converted

What is Cost Inflation Index (CII)?<br>It is a measure of inflation that finds application in tax law, when computing long-term capital gains on sale of assets. Section 48 of the Income-Tax Act defines the index as what is notified by the Central Government every year, having regard to 75 per cent of average rise in the consumer price index (CPI) <br>TaxGuru is a platform that provides Updates On Amendments in Income Tax, Wealth Tax, Company Law, Service Tax, RBI, Custom Duty, Corporate Law , Goods and Service Tax etc.<br>To know more visit at https://taxguru.in/income-tax/cost-inflation-index-meaning-

tax6
Download Presentation

taxguru.in-Cost Inflation Index Meaning amp Index from 1981-82 to 2021-22-converted

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Cost Inflation Index | Meaning & Index from 1981-82to 2021-22 taxguru.in/income-tax/cost-inflation-index-meaning-and-index-for-all-the-years.html Article discusses Meaning of Cost Inflation Index(CII) which is used for Computation of Long Term Capital Gain. Cost Inflation index areNotified by CBDT every year and till date CBDT has notified Cost InflationIndex for the Financial Year 1981-82 to Financial year 2021-21. Cost Inflation index are used for computing indexed cost ofacquisition. What is Cost Inflation Index(CII)? It is a measure of inflation that finds application in tax law, when computinglong-term capital gainson sale of assets. Section 48 of the Income-Tax Act defines the index as what is notified by the Central Government every year, having regard to 75 per cent of average rise in the consumer price index (CPI) for urban non-manual employees forthe immediately preceding previous year. Therefore, if we consider that price of a capitalasset has risen in tandem with base price rise, then if one want to sell an asset and replace it, the cost allowed even after indexation will be lesser than the price payable for newasset. However, in case of many capital asset the price rise is lesser than market price andin many cases it ishigher. How does Cost Inflation Index(CII) help in capital gains computation? Capitalgain, as you know, arises when the net sale consideration of a capital asset is more than the cost. Since “cost of acquisition” is historical, the concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost. Consequently, a lower amount of capital gains gets to be taxed than if historical cost had been considered in the computations. Formula for computing indexed cost is (Index for the year of sale/ Index in the yearof acquisition) xcost. For example, if a property purchased in 1991-92 for Rs 20 lakh were to be sold in A.Y. 2009 -10 for Rs 80 lakh, indexed cost = (582/199) x 20 = Rs 58.49 lakh. And thelong- term capital gains would be Rs 21.51, that is Rs 80 lakh minus Rs 58.49lakh. Cost Inflation Index:- Cost inflation index (CII) as notified by CentralGovernment alongwith analysis of the same is asunder: Cost Inflation Index As Applicable From Financial Year 1981-82 To Financial Year2016-17

  2. ON OR AFTER01.04.2017 Cost Inflation Index from Financial Year 2001-02 to FinancialYear 2020-21 In order to revise the base year for computation of capital gains, section 55 of the Income Tax Act, 1961 was amended vide Finance Act, 2017 so as to provide that thecost of acquisition of an asset acquired before 01.04.2001 shall be allowed to be taken as fair market value as on 1st April, 2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001. Cost inflation indexfor Long Term Capital Assets sold after 01.04.2017 as notified by CBDT NotificationNo. 44/2017 dated 05.06.2017–

  3. Last Updated on16.06.2021 (Republished with Amendment, Source -Income TaxWebsite) Tags: CA SandeepKanoi, Capital Gain, income tax act, indexation, Inflation, inflation index, section48,tax Kindly Refer to PrivacyPolicy& Complete Terms of Use andDisclaimer. AuthorBio Name: CA SandeepKanoi Qualification: CA in Job /Business Company: Taxguru Consultancy / TaxguruEdu Location: Mumbai, Maharashtra, India Member Since: 27 Feb 2017 | Total Posts:928 A Blogger by Passion and a Chartered Accountant by Profession. View FullProfile My PublishedPosts Annual Information Statement – Interest from infrastructure debtfund Annual Information Statement – Interest from specified company by anon-resident Annual Information Statement– Winning from lottery or crosswordpuzzle AIS information category ‘Winning fromhorse’ Annual Information Statement – Income from savingsbank

  4. View More PublishedPosts Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects. Join Taxguru Group onWhatsapp WHATSAPP GROUPLINK Join Taxguru Group onTelegram TELEGRAM GROUPLINK More Under IncomeTax « PreviousArticle Next Article» 261Comments Leave aComment Your email address will not be published. Required fields are marked* Advertisement

More Related