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

    Sir,
    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
    Nihar

    Reply
  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.

    Reply
  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.

    Reply
    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]

      Reply
  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

    Reply
  5. debashis ghosh

    Purchased a flat for investment purpose and recently got possession of the same. What would be the date of acquisition ? Date of allotment or date of possession or date of registration [yet to be done]

    Reply
  6. krishna

    purchased a land in 1982 and constructed a house in 1995 but don’t have any bills of constrcution and sold this property in 2009 for 21 lakhs. How can we calcite price of acquisition and capital gain tax. Please advice.

    Reply
  7. Vivek

    Hi,
    I have bought a property for 2990000/- and paid 265000 for registration and invested 350000 for wood work in year oct-2006.
    Now I am selling it at 8100000 (1% TDS deduction so selling at 8019000/- and 50000 agent fees as brokrage.
    Please let me know how much will be my capital gain tax.

    I am planning to buy another property in next 4-5 months hence please let me know how long I can hold my money and not to pay tax.

    many thanks in advance
    thanks
    Vivek

    Reply
    1. ramesh p

      I booked flat in march 2007 . got possession in october 2009 . cost of flat Rs.29.92 lacs +registration exp Rs.1.62 lacs +
      other exp. like mseb ,security deposit ,soc ,charges total rs.1.17 lacs (.55+..51+.11 ). further spent on modernising of kitchen and flooring costing Rs. 2/- lacs.( bills not available ) . Now I have a purcheser for Rs. 80/ lacs. what will be my capital gain if I sell. flat is in two names 1st name is of me wife and 2nd is mine. If we use entire capital gain amount in paying to developer for a flat already booked in oct 2010 ( in the names of my wife and myself ) and possession of same is expected in 2018 can it be allowed .
      Thanks in anticipation of early reply .

      Reply
  8. Suresh

    I bought a flat for 27 lakhs in May 2009 and now I am planning to sell for 38 lakh. How much do i need to pay as tax?

    Reply
    1. Ritesh

      NIL. as Indexed cost of acquisition is Rs 43.75L and sales price is 38L so Long term capital loss is Rs 5.75L.

      Reply
      1. Vipin

        I think you can help me! I bought a residential plot land in 2002-03 for Rs. 2 Lakhs. I sold it in 2014-15 at 16 Lakhs. Further I bought a residential land for Rs. 10 Lakhs from the sale proceeds. Can the capital gains be set-off against new land purchase else what is my liability.

        Reply
        1. mahadev somappa masaguppi

          I had Purchased open plot on 18 day of Dec. 2010, for Rs. 240000/- constructed building on the same plot by spending Rs. 800000/- now i am selling the ground floor for Rs. 1500000/- i remain in the 1st floor. what is the capital gain & what is the Tax . i am selling the same property in the month of jully 2014

          Reply
  9. maithreyi

    150000-(76550/632*939)=36265. Its a long term capital gains since the period of holding is more than 3 years. Tax amount is 36265*20/100=7253. If your income from all the other sources is less than Rs. 200000(BEL) you can set off the amount.

    Reply

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