Capital gain index chart in excel
The price of a product increase overtime, and this brings down the purchasing power of money. Say, if 5 items can be bought for Rs. Cost inflation index calculates the estimated rise in the cost of goods and assets year-by-year as a result of inflation. It is fixed by the central government in its official gazette to measure inflation. Section 48 of the Indian Income Tax Act, , defines the index as notified by the government every year. Cost Inflation Index is a measure of inflation, used to calculate long-term capital gains from sale of capital assets.
Cost Inflation Index Calculation for FY 2019-20 & AY 2020-21
Last Updated on December 6, The CII is used to notify the rate of inflation for indexation purpose in India every financial year. This is what is known as the Indexed Cost of Acquisition. If you wish to know how the Cost Inflation Index numbers have moved up since the Base Year of , then have a look a the figures below:. You can also use this link to check these rates.
But how is this CII figure actually used to calculated the indexed costs? After 4 years, i. Assume you sell it at this point. So mathematically speaking, you made capital gains of Rs 2 lac. But this gain was made after a period of 4 years, which is more than 3 years requirement for capital gains qualifying as Long Term Capital Gains.
So this means, you need to adjust the cost of acquisition for indexation. And for that, following numbers are known:. And this translates to:. To sum it up as a reminder, the CII number is used to compute the inflation-adjusted purchase cost of an asset in order to calculate LTCG on it when it is sold.
This reduces the tax as the adjusted-cost which is higher and not the actual-cost is taken to calculate the capital gains. And it goes without saying that you can use CII number to calculate inflation-adjusted cost only for those assets where inflation-adjusted indexation benefit is allowed. For example — the LTCG arising from equity shares and equity mutual funds is not eligible for indexation benefit.
Suppose you like to invest in real estate and purchased a house in for Rs 25 lakh. And since you were making good profits on this investment, you sold it in FY for Rs 52 lakh. Instead of paying a tax of Rs 5. And I am sure you would have realized by now that the effects of indexation benefit are more pronounced when the inflation is high.
I know what you are thinking — indexation is such a beneficial concept as it reduces your tax outgoes substantially. But why is it that the government offers such a benefit in first place…. The answer is pretty simple. You already know inflation is always there practically speaking. That the cost of things keeps rising. The Cost Inflation Index is calculated to adjust and match the prices to the inflation rate, and more importantly for calculating the estimated increase in the prices of goods and assets year-by-year due to inflation.
So once the growth in prices due to inflation is known, the actual residual growth can be considered as real capital appreciation and taxed. And you sell it for Rs in 5th year. Now your gain is Rs But due to inflation, the cost of that product itself would have grown.
And this is captured by updates in CII. So if CII at the time of purchase was and in the year of sale was , then that means that the growth in price from Rs to Rs has two parts:. In combination, the growth due to inflation Rs and that due to actual growth Rs , take the price of the product from Rs to Rs in 5 years. So you only get taxed for the actual growth of Rs And that is the reason for having this concept in the first place. And to pass on the benefit of this concept to the taxpayers, cost inflation index benefit is applied to the long-term capital assets, due to which purchase cost increases, resulting in lesser profits actual in-hand profits still remain same and lesser taxes.
So up to 31 st March , the capital gain was calculated with as the base year. However, from 1st April onwards, the purchase price will be calculated based on the fair market value in the year And this was done to address the problems faced by taxpayers in calculating capital gains tax payable on assets mainly real estate and properties acquired on or before The tax authorities too were finding it difficult to rely on the valuation reports alone.
So the government decided to shift the base year to so that the asset valuations can be done quickly and accurately.
And for assets eligible for indexation purchased before 1st April , the taxpayers are allowed to take the higher of actual cost or Fair Market Value as on 1st April as the purchase price and accordingly, avail the indexation benefit.
That was the reason for changing the base year of CII from to By the way, if you are curious to know what the Old CII Series from the base year onwards was, then let me list it for you:. Just a reminder that the above series is the Old one. New CII Series has the base year of and is detailed earlier in the post.
If you are mutual fund investor , then the Cost Inflation Index can help lower your tax obligations as well as seen in the first example. Within the mutual fund space, the Debt mutual funds are increasingly becoming popular among investors looking for an alternative to bank fixed deposits.
Regular Emails Monthly Emails. A Good Financial Advisor can be the difference between meeting or missing your financial goals. Or simply Apply for Financial Plan. Skip to content Close Menu. But for what is this latest CII number used?
So do you pay tax on this full Rs 2 lac gain? Rs 26, So indexation helps reduce your tax obligations. Cool Right? Indexation can dramatically reduce your tax outgo. I told you that the base year for CII was changed. But why was this done? Regular Emails. Monthly Emails. Related Articles You May Like. Next Entry Angry Investor. Good Returns a Birthright. Feature not Bug. One comment You have put really good information….
It will helpful for me.. Thank you! Leave a Reply Cancel reply.
All the value must be travel through CII (Cost Inflation Index) which was declared by the Government of India from time to. This CII number is important as it will be used to compute inflation adjusted long-term capital gains (LTCG) on assets such as house, gold, debt.
Base year has been shifted from FY to FY In respect of assets acquired prior to 1 Apr. Cost Inflation Index basically means the index notified by the Central Govt. However, indexed cost of acquisition is arrived at by multiplying the cost of acquisition with the change in cost inflation index since the year of acquisition or 1 April, whichever is later. This notification shall come into force with effect from 1st day of April, and shall accordingly apply to the assessment year and subsequent years.
Base year has been shifted from FY to FY In respect of assets acquired prior to 1 Apr.
If the property is purchased before , then you need to get the Fair market value of the property in and the use that for Indexed cost. In such cases,. In the post further below , I have explained how can you get the fair market value of the property in in case the property is acquired before
Capital Gain Index Chart
Cost Inflation Index CII is a measure of inflation that is used for computing long-term capital gains on sale of capital assets. It comes under Section 48 of the Income-Tax Act. Section 48 of the Income-Tax Act defines the index as what is notified by the Central Government every year. In India the year for financial transactions start from 1 st April and ends on 31st March following year. For example For any transaction between 1st April to 31st Mar the Indexation for year i.
Cost Inflation Index
This indexed cost is then used to calculate your long term capital gains and the resultant tax on same. In this post, I will share the complete cost inflation index chart that's updated till AY plus a Capital Gains Tax calculator for you to easily compute your tax liabilities Cost Inflation Index is used to calculate your real long term capital gains on some specified asset classes. In case you sell your property prior to 24 months or other assets prior to 36 months, the gains will be considered as short term gains and will be taxed at your existing slabs. These indexation benefits are available for your investments in Real estate, Gold, Mutual funds and Unlisted Shares. If you acquired an asset prior to , you will have to calculate the fair value of same as of and use that as your cost of acquisition. Let's say you acquired a property in FY for 20 lakhs and sold it in FY at 1 crores. Without taking CII into account, your capital gains is 80 lakhs.
On 5th June, , the government changed the base year of cost inflation index from to Also, if you hold the immovable property for 2 years and then sell it, the gains from the sale of land or building will qualify as long-term capital gains.
Last Updated on December 6, The CII is used to notify the rate of inflation for indexation purpose in India every financial year. This is what is known as the Indexed Cost of Acquisition. If you wish to know how the Cost Inflation Index numbers have moved up since the Base Year of , then have a look a the figures below:.
Finance Ministry notifies cost inflation index for FY 2019-20 as 289
It calculates both Long Term and Short Term capital gains and associated taxes. Before you start using the calculator here are some things you must know:. Short Term Capital Gains from property is added to income and taxed at your income tax slab rates. Download Capital Gains Calculator for Property. In case the property has been purchased before April , you will need to get its fair valuation done by income tax approved valuers as of April This is because new revised CII for indexation started getting published taking FY as base with value of Cost on improvements made before April 1, cannot be considered as that should be included in the value of property calculated as of April 1, To calculated capital gains for inherited property, the purchase cost and time of the original buyer is taken into consideration. Download the excel based Capital gains calculator for Property from the link below:. Download Capital Gains Calculator for Property There are two ways you can save Long Term Capital Gains from sale of property. In case you are not able to invest full capital gains as above, you will get tax exemption only on invested amount. The remaining amount would be taxed as per rules. The sale proceeds should be deposited in Capital Gains Account scheme with banks if the gains have not been utilized for buying property or bonds before filing income tax returns.
