CBDT on 7th June 2017 announced the Cost of Inflation Index for FY 2017-18 (AY 2018-19). The biggest change this year is that the base year was changed from the earlier FY 1981-82 to FY 2001-02.
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 >What is the Cost of Inflation Index for FY 2017-18 or CII with base year 2001-02?
Below is the complete list of Cost of Inflation Index for FY 2017-18 from new base year FY 2001-02 to FY 2017-18.
Hope this information will be helpful for you in arriving at your capital gain tax.
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Dear sir, I inherited a property in 2014 after the death of my father, who owned it since 1946. I sold it in 2018. How should I calculate the LTCG? The cost of acquisition is not known. regards
Dear Jain,
Refer above formula properly.
By the stroke of a pen the new government changed the base year for calculating cost inflation index based capital gain and increased the amount of capital gain liable for tax by several notches for persons who bought capital assets like land & building many years before the new base year. Discrimination of high order also, because whether you bought an asset in 81-82 or 2000-01 the cost is same!! How to fight such unfair change?
Dear Bhat,
Thanks for sharing your views and I can understand your concerns.
I have been informed by CAMS that for debt mutual funds redeemed during April and May 2017, the old cost inflation table is applicable for îndexation and only for units redeemed after June 2017, the new îndexation table with 2001 as base is applicable. They say the government order is dated June 2017. Are they correct?
Dear Ajit,
Let them share that notification with you and you can also share the same with me, then we discuss.
I have sold a residential land in May 2018 recently which was purchased in Nov 2010. For capital gain CII, I need the index applicable for the FY 2018-19. But the published data has only till FY 2017-18. What do I do and when we can expect the index to be released by Government? Thanks
Dear Viswanathan,
I think they publish soon.
Sir,i purchased a land in 1994 and sold it in feb 2018.what will be the cii for 1994 and 2018?
Ravinder-Refer above post properly. The base year now changed and accordingly, you have to consider the index.
if don't mind , clarify /give me one good reason, why my posted Reply, for the common good and creating an awareness among your readers, instantly displayed, has since been deleted.
Vaswami-Can you point out or share again which of your comment deleted??
sorry, not pre4served but remember to have mentioned the fact that the several areas of controversy, despite drawn attention of the CBDT to, have remained to be clarified, till date.
Also, supplied the LInk to my last Updated Post on Linkedin.
Vswami-Then remember of what you commented and let me know that.
I sold a shop for Rs.1100000/- in FY 2017-18 which was acquired by me under will of my father. Father had purchased in 1987 for Rs. 50000/-. Kindly tell me tax liability.
Gupta-Refer my above formula to arrive at capital gain.
Hello sir,
I have a one question about loan which is repay by selling house for rs. 6lacs via cheuqe which had purchased for rs. 40000 in Aug 2008 and sell them in 2018 .
So my question is this loan is allowed under sec 80c ? What about interest and client now a days no filling return so he was not taken any deduction earlier for principal amount and interest .
Riddhi-If it is a homeloan then the principal paid during the current financial year can be claimed for deduction under the CURRENT FY using Sec.80C deduction. Same way, interest also can be claimed for deduction of up to Rs.2,00,000 under Sec.24.
How would I determine the selling cost of my house, should it be DLC or rough estimate, whereas DLC rate never meet to actual selling cost.
Sanjay-Selling cost is the sale deed cost.
It is very good article to understand the concept of indexation & LTCG. Thanks from my side.
I have one question:
If a property is sold in FY 2017-18, what is the applicable CII ?
I am selling a plot of value 11 lakh in February 2018 (FY 2017-18). I have bought in October 2011 (FY 2011-12) in 4.83 Lakh. I have invested 65,000 Rs. (in FY 2013-14) in maintenance or boundary wall of plot.
Please let me know the CII applicable as per old rates of CII, nor the new rates of CII ?
Also, what will be my indexed cost of plot to calculate the capital gain?
If you can answer I will be grateful.
Abhishek-The applicable new CII for you is FY 2017-18 ONLY.
I was working in a bank. I availed a housing loan in 1983-84 for construction of house and in the years following I applied for loans for construction of first floor, the last loan availed in 1998-99.(Financial years). My total loans availed during this period is roughly Rupees 5 lakhs. I want to sell this property. How am I to calculate capital gains. Should I take Rs.5 lakhs with base as 2000-01 or calculate it based on 1981 as base. If the latter is the case, cost indexation has
not been published with base 1981. The last cost indexation based on old formula is 1125 AY 2016-17.
I would be thankful if you could answer my query.
Once again thanks and regards.
FROM ; R. SANKARA RAMAN, CHENNAI - 600 044.
Sankara-You have to use the current base year index of 2000-01.