What’s the CII or price of inflation Index for FY 2023-24? CBDT notified the Price of Inflation Index for FY 2023-24 AY 2024-25 for Capital Achieve on tenth April 2023. You could bear in mind that the bottom yr was modified from the sooner FY 1981-82 to FY 2001-02.
Change within the Base yr for Capital Achieve Indexation
In Finances 2017, the Authorities proposed to vary the bottom yr to calculate the indexation profit from 1981 to 2001. Do do not forget that the change within the base yr is throughout all asset lessons however the impression would differ throughout property that get pleasure from indexation advantages on long-term capital positive factors—actual property, unlisted shares, gold, and bond funds. As much as thirty first March 2017, the capital acquire was calculated with 1981 as the bottom yr. Because of this the acquisition value of an asset purchased earlier than 1 April 1981 could possibly be calculated on the premise of the honest market worth of 1981. Nonetheless, from 1st Apr 2017, the acquisition value will probably be calculated based mostly on the honest market worth of 2001. Accordingly, capital positive factors on property acquired earlier than 1 April 2001 can even be calculated utilizing honest market worth as of 2001.
What’s the Price of Inflation Index (CII)?
It is a measure of inflation that’s used for computing Lengthy Time period Capital Beneficial properties (LTCG) on the sale of capital property as per IT Part.48.
It’s introduced for every Monetary 12 months however not based mostly on Evaluation 12 months. Therefore, the relevant charge of CII will probably be for that exact monetary yr.
To reach at a capital acquire, it is rather a lot essential to calculate the LTCG. For this goal Price of Inflation Index is a should.
Take an instance of how the listed price of acquisition will probably be calculated utilizing Price of Inflation Index or CII.
The formulation is as beneath.
Listed Price of Acquisition=(Price of Acquisition/Price of Inflation Index (CII) for the yr during which the asset was first held by the assessee OR FY 2001-02, whichever is later)* Price of the Inflation Index (CII) for the yr during which the asset was bought or transferred.
Allow us to assume that you simply bought the property in FY 2005-06 at Rs.50 lakh and bought the identical in FY 2017-18 at Rs.1.5 Cr. Now the listed price of acquisition will probably be as per the above formulation i.e.
Listed Price of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Lengthy Time period Capital Achieve=Promoting Worth-Listed Price of shopping for property=Rs.33,76,069.
(Word-As per the beneath Price of Inflation Index (CII), the CII charge for FY 2017-18 is 272 and for FY 2005-06, it’s 117).
Nonetheless, if you don’t contemplate the listed price, then in plain the acquire could also be stated as Rs.1 Cr lakh (Rs.1.5 Cr-Rs.50 Lakh). However within the case of taxation, the LTCG on capital property will probably be after adjusting the price of shopping for to inflation or the Price of Inflation Index (CII).
Price of Inflation Index for FY 2023-24
Allow us to now look into the price of inflation index for FY 2023-24 and likewise what was the historic price of inflation index from FY 2001-02.
Now allow us to see how this price of inflation index is rising yr on yr from the bottom yr to the most recent FY 2023-24.
You seen that from final yr to this yr, the increment is round 5.1%.
Hope this data will show you how to in arriving at your capital acquire tax.
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