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CII – Cost Inflation Index From 1981-1982 To 2016-2017:


Cost Inflation Index : Indexation is a process by which Cost of acquisition is adjusted against inflationary rise.  Every year Govt notifies Cost Inflation Index which is used for calculating Long term capital gains.

When investor sells its property then CII index is used to determine current indexed value.

Govt have recently notified CII for year 2016-1017.Historical values of CII are as follows:

 

Financial Year

 

Cost Inflation Index
1981-1982 100
1982-1983 109
1983-1984 116
1984-1985 125
1985-1986 133
1986-1987 140
1987-1988 150
1988-1989 161
1989-1990 172
1990-1991 182
1991-1992 199
1992-1993 223
1993-1994 244
1994-1995 259
1995-1996 281
1996-1997 305
1997-1998 331
1998-1999 351
1999-2000 389
2000-2001 406
2001-2002 426
2002-2003 447
2003-2004 463
2004-2005 480
2005-2006 497
2006-2007 519
2007-2008 551
2008-2009 582
2009-2010 632
2010-2011 711
2011-2012 785
2012-2013 852
2013-2014 939
2014-2015 1024
2015-2016 1081
2016-2017 1125

Significance of Cost Inflation Index:

Suppose

  • Ramesh purchased residential property in June 2006 :@ Rs.16 Lakh
  • He sold this property in June 2015: @ Rs.60 Lakh

Then for calculating indexed value of property, CII of corresponding years will be used:

 

Capital Gain Tax CII

Ramesh will calculate Capital gains based on this indexed cost.

 

Long term Capital Gain will be calculated as:

Sale value under consideration after Expenses paid towards brokerage, advt & indexed cost of improvement

(Less)

Indexed Cost of acquisition 

 

After Calculating capital gains, Ramesh has options as below to claim exemption from LTCG tax:

  1. Buy Residential property of value equivalent to capital gains.This property must be purchased either 01 yr Before OR 02 Yrs After sale of property.
  2. Property need to be bought on sellers name only to claim exemption.
  3. If investor invests in under construction property then Construction of property must be completed within 03 Yrs after sale of property.As per one of court verdict,if builder of new construction fails to hand over property within 03 yrs,exemption is still allowed.
  4. Invest capital equivalent to capital gains in 54EC capital bonds @6% (interest paid annually) issued by NHAI or REC, with in 06 months of sale of property.
  5. If entire capital gains is not invested then proportionate exemption will be allowed.
  6. If he decides to pay tax then he will need to pay long term capital gain tax at rate of 20% + surcharge + Cess on capital gains.

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