NEW DELHI: The Cost Inflation Index for the current fiscal year beginning April 2023 has been announced by the income tax department for use in determining long-term capital gains resulting from the sale of movable property, securities, and jewellery.
Taxpayers use the Cost Inflation Index (CII) to calculate gains from the sale of capital assets after accounting for inflation.
According to a Central Board of Direct Taxes notice, the Cost Inflation Index for FY 2023–24 applicable to AY 2024–25 was 348. (CBDT).
Typically, the income tax division notifies CII in June.
The CII figure for the most recent fiscal year was 331; for the fiscal year 2021–2022 it was 317.
Rajat Mohan, senior partner at AMRG & Associates, stated that the CII would make it easier for taxpayers to calculate their long-term capital gains tax and submit their advance tax payments on time.
“As comparison to the previous fiscal year, the tax agency notifies the cost of inflation index 3 months earlier this year. The first quarter of FY 2023–24 can now be used by taxpayers to carefully and accurately calculate their long-term gains tax and pay the necessary advance tax “Mohan said.
Under the Income-tax Act of 1961, the Cost Inflation Index, or CII, is announced each year. The “indexed cost of acquisition” is a commonly used formula to determine capital gains when selling any type of capital asset.
In order to qualify as “long-term capital gains,” an asset must typically be held for more than 36 months (24 months for real estate and unlisted shares, 12 months for listed securities).
The CII is used to determine the inflation adjusted purchasing price of assets in order to calculate taxable long-term capital gains because rising prices for products cause a decline in purchasing power over time (LTCG).
