Cost Inflation Index (CII) Chart for long term Capital Gains [FY 2018-19]

Money loses its value over time because of inflation...

...And when it comes to sales of your long term capital gains, your real profit may actually be much lower because of the rise in prices over time.

The Income Tax department recognizes this and issues an annual Cost Inflation Index (CII) that allows you to index your cost of acquisition to take inflation into account.

This indexed cost is then used to calculate your long term capital gains and the resultant tax on same.

In this post, I will share the complete cost inflation index chart that's updated till AY 2018-19 plus a Capital Gains Tax calculator for you to easily compute your tax liabilities...

How does CII Indexation work?

Cost Inflation Index is used to calculate your real long term capital gains on some specified asset classes.

The formula to calculate taxes on your long term capital gains after indexation is as follows:

The current base year for CII is FY 2001-02 and the CII value starts at 100 for that year.

Every financial year, CBDT (central board of direct taxes) will notify CII value for that year after taking inflation into account.

The indexation benefit is only applicable for long term capital gains i.e. you should have held your property or unlisted shares for at least 24 months and other assets (i.e. gold, debt mutual funds) for at least 3 years before you can avail of this benefit.

In case you sell your property prior to 24 months or other assets prior to 36 months, the gains will be considered as short term gains and will be taxed at your existing slabs.

These indexation benefits are available for your investments in Real estate, Gold, Mutual funds and Unlisted Shares.

With that, let's look at the exact Cost Inflation Index Chart from FY 2001-02 till FY 2017-18...

If you acquired an asset prior to 2001-02, you will have to calculate the fair value of same as of 2001-02 and use that as your cost of acquisition.

Let's take an example on how to use the table above.

Let's say you acquired a property in FY 2003-04 for 20 lakhs and sold it in FY 2017-18 at 1 crores.

Without taking CII into account, your capital gains is 80 lakhs. But your capital gains for tax purposes will be calculated as follows:

So instead of being liable for 20% of 80 lakhs (your capital gains in pure currency terms), you are actually liable for 20% of 50.09 lakhs which is INR 10.01 lakhs.

However, in case your asset was acquired prior to 2001-02 and was sold prior to April 1st, 2017, you will have to use the old CII table with 1981 as the base year to calculate your LTCG for that year.

Old Cost Inflation Index (from FY 1981-82 till FY 2016-17)

Frequently Asked Questions

How to calculate the fair value of an asset acquired prior to 2001-02?

You will have to get a fair market value of your asset as of FY 2001-02.

You can refer to the value of similar properties that were sold in 2001-02 but often the best way is hire a Government approved valuer.

You can find a list of approved valuers for immovable property on Income Tax's website by clicking here

Do I have to use indexation compulsorily?

Yes, now it is compulsory.

Earlier it was possible to choose between a 10% tax without indexation or a 20% tax after indexation. Government of India has done away with 10% option and now only 20% tax post indexation applies.

Can indexation result in a capital loss?

Yes, there can be a negative capital gain after indexation even if your purchase price is lower than your sales price in currency terms.

This will be considered like a capital loss and can be set off against gains of that specific year. If you can't set it off in the same year, report it in your income tax return and you can carry it forward for next 8 years.

What all assets are eligible for indexation benefits?

Not all assets are eligible for indexation benefits.

Your debt mutual funds, real estate, unlisted shares, gold and fixed maturity plans are eligible for indexation benefits.

Fixed deposits, recurring deposits, Post Office Monthly income schemes, NSCs or interest on savings bank account is not eligible.

Shares of listed companies and Equity Mutual funds are not subject to any long term capital gains taxation (i.e. if held more than 12 months) so Indexation is not relevant for them.

When will CII be notified by the Government?

CII is notified by CBDT once a year. Notification declaring same typically comes out in June of each year. The CII for 2017-18 is 272.

How's CII actually calculated? What formula does CBDT use?

As per Income Tax Act's section 48, CII is calculated by taking 75% of average rise in the consumer price index (CPI) for the urban non-manual employees in the immediately preceding year.

In simpler words, CII will increase by 75% of actual inflation % during the last financial year.