June 14, 2018

Cost of Inflation Index for FY 2018-19 / AY 2019-20 for Capital Gain

CBDT on 13th June 2018 announced the Cost of Inflation Index for FY 2018-19 / AY 2019-20. You may be aware that the base year was changed from the earlier FY 1981-82 to FY 2001-02.

What is Cost of Inflation Index (CII)?

It is a measure of inflation that is used for computing Long Term Capital Gains (LTCG) on the sale of capital assets as per IT Section.48.

It is announced for each Financial Year but not based on Assessment Year. Hence, the applicable rate of CII will be for that particular financial year.

To arrive at a capital gain, it is very much important to calculate the LTCG. For this purpose Cost of Inflation Index is a must.

Take an example of how the indexed cost of acquisition will be calculated using Cost of Inflation Index or CII.

The formula is as below.

Indexed Cost of Acquisition=(Cost of Acquisition/Cost of Inflation Index (CII) for the year in which the asset was first held by the assessee OR FY 2001-02, whichever is later)* Cost of the Inflation Index (CII) for the year in which the asset was sold or transferred.

Let us assume that you purchased the property in FY 2005-06 at Rs.50 lakh and sold the same in FY 2017-18 at Rs.1.5 Cr. Now the indexed cost of acquisition will be as per above formula i.e.

Indexed Cost of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Long Term Capital Gain=Selling Price-Indexed Cost of buying property=Rs.33,76,069.

(Note-As per the below Cost of Inflation Index (CII), the CII rate for FY 2017-18 is 272 and for FY 2005-06, it is 117).

However, if you do not consider the indexed cost, then in plain the gain may be said as Rs.1 Cr lakh (Rs.1.5 Cr-Rs.50 Lakh). But in the case of taxation, the LTCG on capital assets will be after adjusted the cost of buying to inflation or Cost of Inflation Index (CII).

Hope you understood the concept and importance of Cost of Inflation Index (CII). Below is the chart showing the Cost of Inflation Index (CII) from the changed base year FY 2001-02 to FY 2017-18.

What is the Cost of Inflation Index for FY 2018-19 / AY 2019-20 or CII with the base year 2001-02?

Below is the complete list of Cost of Inflation Index for FY 2018-19 / AY 2019-20 from new base year FY 2001-02 to FY 2018-19.

This notification will come into force with effect from 1st day of April 2019 and will accordingly apply to the
Assessment Year 2019-20 and subsequent years.

Cost of Inflation Index for FY 2018-19 AY 2019-20

Hope this information will be helpful for you in arriving at your capital gain tax.

26 Comments

  1. Sir I constructed house on1991-92 at town BANDA in UP, Total construction cost was around 3,56,000 and repair on2003 with cost arounf 1.5 lakh. The market value or fair price is not available for the 2001-02 to take as base price for further indexation. The house is sold on 11.10.2019 on Rs 28,55,000. How to calculate LTCG on sell.
    CHANDRA PAL SINGH GAUR
    PHONE 9428007789
    E MAIL ID: [email protected]
    kindly suggest

    Reply
    • Dear Chandra,
      There are property evaluators in your area. Contact them and they will identify the fair price and give you valuations. Accordingly, you can do the calculation.

      Reply
  2. I BOUGHT A PLOT FOR Rs.33300 on Feb, 1989.
    What woud be the index cost on April 2018?

    Reply
  3. When is the CII for FY 2019-20 going to be declared?

    Reply
  4. Hi Basavraj,

    I bought an apartment in India in 2012 and want to sell in 2020 as I moved abroad. I comes under long term capital gain. As per the above index table I would be selling it below the amount, beyond which capital gain would be applicable i.e. say i bought for Rs 100 and sell for Rs109 and as per index calculation there would no capital gain tax upto Rs 110. My questions are:

    1. As i am not supposed to pay any capital gain tax, Should I file any documentation with Indian government at time of selling (I would be NRI at time of selling).

    2. As I moved 2 months back from India to abroad. Do I need to file IT returns for FY 19-20 (1apr 2019 to 31mar 2020) in future?

    Note: I have filed my tax returns for FY18-19 and my last working day in a Pvt company was 18th Apr 2019 (18 days of income in FY19-20 which was less than Rs 50000)

    Reply
    • Dear Gurwinder,
      1) Your buyer will deduct the TDs as you are an NRI. Hence, while to claim TDs, you have to file IT return and show your tax liability.
      2) No, if there is no income from India.

      Reply
      • Thanks,
        For point#1: If there is capital loss rather than gain during sale. Would there be any TDS deducted by the buyer?

        Reply
        • Dear Gurwinder,
          Capital Gain or Loss depends on your calculation. Hence, if the sale in question is from NRI. Hence, there will be a TDs.

          Reply
  5. I understand that we can get benefit for renovation of house also. Please guide on this

    Reply
  6. if i sale purchase property on 2008 and sale property on 2019-20. what is cost of inflation is taken in that case for FY-2019-20

    Reply
  7. I have purchase plot date of 05/07/2018 amount =850200/- but i have sold 15/04/2019 amount 850200/- how to calculation capital gains

    Reply
    • Dear Viral,
      Refer the above post where I have explained the calculation.

      Reply
  8. Sir,

    I purchased a plot for Rs. 4800/- in 1992 and going to sellit in 2018 at 2.4 lakhs. I want to know LTCG tax i have to pay. as cost of indexation has base as 2001-2002, I am confused. Earlier in budget announced no indexation was mentioned by now if I sell what would be indexation in 1992 and in 2018.

    Reply
    • Dear Raghavan,
      I can’t calculate for each individual. Hence, refer above post and you can easily calculate on your own.

      Reply
  9. Sir,
    I purchased house in oct 2012 for Rs 2100000 (As per agreement).
    Took bank loan for Rs 1600000
    sale deed value is Rs 840500. (in sale deed it is mentioned semi furnished house).
    what is my purchase value?
    I sold house in sep 2018 for Rs 3800000.
    Registration charge for purchage Rs 84000
    brokerage for selling Rs 70000 (given to agent through cheque no receipt)
    how much i have to Pay as capital gain tax.

    Reply
    • Dear Deva,
      For you the sale value will be the value of sale deed. Regarding calculation, please refer above post and accordingly calculate.

      Reply
  10. Sir, I need your help for some financial planning. Can you please check the below information and help. Thank you.

    My age – 34
    Income – 1,00,000/month
    Married and spouse income is 1,00,000/month. We do not have kids.

    Investments are –

    RD – 10,000 per month
    FD – 200,000 rupees

    MF –
    1. SBI Bluechip – 10,000 per month
    2. Aditya birla frontline equity – 10,000 per month

    Insurance – 1 Crore term plan.

    Liabilities – 50 lakh house loan

    Goals/Questions:

    1. Want to settle the house loan in next 5 years.

    Please let me know if we are on the right track.

    Reply
    • Dear Samarjeet,
      Sadly the financial planning can’t be done with mere few lines of sharing.

      Reply
      • Ok Sir but from the above details. What is your advice can you please help me.

        Reply
        • Dear Samarjeet,
          I am repeating the same. It is hard to give with limited few lines of sharing by you.

          Reply
          • Ok Sir, I understand that these are very less details . Please check the below details.

            The FD goal is for emergency fund. RD goal is made for helping us to close the home loan. Health insurance is for 1 crore for me and my spouse. The 20,000/ month Mutual funds are kept for retirements.

            I have home loan at 9% for 20 years. Our 5 years are over now and so for next 15 years 50 lakh is outstanding.

            I am reading your blogs and trying to decode financial planning. Now the goal is to close the loan in next 5 years. Wanted to know if this is the right way that will help us to close the loan. Thank you again.

            Reply

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