Cost Inflation Index – Capital Gain

Cost Inflation index for the Financial Year 2014-2015 has been announced to be 1024

For computing long-term capital gains, knowledge of cost inflation index is necessary. The capital gains will be computed after deducting the indexed cost of acquisition (purchase) from the full value of consideration. The cost of purchase of the asset will be increased by applying the cost inflation index (CII). Once the cost inflation index is applied to the cost of acquisition, it becomes indexed cost of acquisition.

In computing capital gains arising from the transfer of a long term capital asset, deduction can be claimed for the cost of acquisition and the cost of Improvement after indexing them.

Cost inflation Index” for any year means such index as the central government may, having regard to 75% of average rise in consumer price index for urban non manual employees for the immediately preceding previous year to such previous year by notification in the official gazette specify in this behalf.

This means an amount which bears to the cost of acquisition, the same proportion as CII for the year in which the asset is transferred bears to the CII for the first year in which the asset was held by the assessee or for the year beginning on 1st April, 1981, whichever is later.

Cost Inflation Index – For Capital Gain

The cost inflation indices for the financial years so far have been notified as under:

Financial YearCost Inflation IndexFinancial YearCost Inflation Index
1981 – 821001997 – 98331
1982 – 831091998 – 99351
1983 – 841161999 – 00389
1984 – 851252000 – 01406
1985 – 861332001 – 02426
1986 – 871402002 – 03447
1987 – 881502003 – 04463
1988 – 891612004 – 05480
1989 – 901722005 – 06497
1990 – 911822006 – 07519
1991 – 921992007 – 08551
1992 – 932232008 – 09582
1993 – 942442009 – 10632
1994 – 952592010 – 11711
1995 – 962812011 – 12785
1996 – 973052012-13852
 2013-20149392014 – 20151024

Cost Inflation Index – Chart showing Change of Rate

The increase in cost inflation rate has shown in the chart below.

Cost inflation Index 1981 to 2014-2015

120 Comments Cost Inflation Index – Capital Gain

  1. Nihar Pal

    I have 2 FMP-Debt Funds maturing this financial yr 2014-15. They are for 1095 days. My query is will these FMP be eligible for LTCG under the new rules governing Cap gains?
    Thank u

  2. Balaji

    Few Questions with respect to this:

    1) What is meant by Cost of Property? Is it the purchase price of the property by itself (or) Can Stamp Duty + Registration be added to calculate the same? (since they were cost to the buyer while purchasing the property)

    2) In my situation, the bank loan is not closed with a few lakhs remaining. I want to sell the property if a proper buyer approaches. In this case bank will only return the money after deducting the reminder of loan. Since that being the case, What will be the selling price of the property? Is that the actual selling price (or) the amount that is left in my bank account after the loan reminder is deducted by the bank

    Please do let me know. Thanks.

  3. D N SHAH

    My father purchased a residential property in 1969 for RS 98,000.00 He passed away in 2012 June & now the house is in joint names of we two brothers 50 % each. now we plan to sell this property for RS 18.5 Cr. what will be rate able value of this property & if we both buy separate house for say about 6 Cr each what will be capital gain applicable.

    1. Sudeep

      Dear Shah,

      You have to get the that property valued by registered officer as on 01.04.1981. Suppose the authority says the value of the said property on 1.4.1981 was nearly 10,00,000/- then your cost would be 1000000/100*1024=93,90000 and your sale vale is 13.5 crores.

      Capital gain is about 12.5 crore and individually it is 6.25 crores. you can invest in new property and avail the exemption u/s 54 provided you dont have more than 2 houses including the new one.

      [In order to protect the privacy of our users a Phone Number or Email Id is removed from this comment]

  4. sakshi

    purchased a property and the installments paid are 5/95- 15000, 2/96-65000,8/96-64000,12/97-48000,4/98-73600,10/98-57600,5/00-80000 so total is – 402200…sold on 20/06/2014- 5600000.
    please let me knw long term capital gain and tax…thanx


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