Cost Inflation Index (CII) Chart for long term Capital Gains [FY 2018-19]

Cost Inflation Index

Money loses its value over time because of inflation...

...And when it comes to sales of your long term capital gains, your real profit may actually be much lower because of the rise in prices over time.

The Income Tax department recognizes this and issues an annual Cost Inflation Index (CII) that allows you to index your cost of acquisition to take inflation into account.

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 2018-19 plus a Capital Gains Tax calculator for you to easily compute your tax liabilities...

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How does CII Indexation work?

Cost Inflation Index is used to calculate your real long term capital gains on some specified asset classes.

The formula to calculate taxes on your long term capital gains after indexation is as follows:

Indexed cost of acquisition = Actual purchase price * (index in the year of sale/index in the year of purchase)


Long term Capital gains after Indexation = Sales consideration - Indexed cost of acquisition

Taxes = 20% * Long term capital gains after indexation

The current base year for CII is FY 2001-02 and the CII value starts at 100 for that year.

Note that prior to FY 2017-18, the base year used to be FY 1981-82. This is not true anymore.

Every financial year, CBDT (central board of direct taxes) will notify CII value for that year after taking inflation into account.

The indexation benefit is only applicable for long term capital gains i.e. you should have held your property or unlisted shares for at least 24 months and other assets (i.e. gold, debt mutual funds) for at least 3 years before you can avail of this benefit.

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.

Asset Type

Holding Period

Type of Tax

Tax Rate

Property

>24 months

Long Term

20% after indexation

Property

<24 months

Short Term

At Tax Slabs

Unlisted Shares

>24 months

Long Term

20% after indexation

Unlisted Shares

<24 months

Short Term

At Tax Slabs

Other eligible assets

>36 months

Long Term

20% after indexation

Other eligible assets

<36 months

Short Term

At Tax Slabs

These indexation benefits are available for your investments in Real estate, Gold, Mutual funds and Unlisted Shares.

With that, let's look at the exact Cost Inflation Index Chart from FY 2001-02 till FY 2017-18...

Financial Year

Assessment Year

CII Value

2017-18

2018-19

272

2016-17

2017-18

264

2015-16

2016-17

254

2014-15

2015-16

240

2013-14

2014-15

220

2012-13

2013-14

200

2011-12

2012-13

184

2010-11

2011-12

167

2009-10

2010-11

148

2008-09

2009-10

137

2007-08

2008-09

129

2006-07

2007-08

122

2005-06

2006-07

117

2004-05

2005-06

113

2003-04

2004-05

109

2002-03

2003-04

105

2001-02

2002-03

100

Notified CII Value for FY 2017-18 (AY 2018-19) is 272

If you acquired an asset prior to 2001-02, you will have to calculate the fair value of same as of 2001-02 and use that as your cost of acquisition.

Let's take an example on how to use the table above.

Let's say you acquired a property in FY 2003-04 for 20 lakhs and sold it in FY 2017-18 at 1 crores.

Without taking CII into account, your capital gains is 80 lakhs. But your capital gains for tax purposes will be calculated as follows:

Original Cost of Property

INR 20 lakhs

Year of Purchase

FY 2003-04

Proceeds from Sale

INR 1 crore

Year of Sale

FY 2017-18

CII Index for the Purchase Year

109

CII Index for the Sale Year

272

Long Term Capital Gain before Indexation

80 lakhs (1 crore - 20 lakhs)

Long Term Capital Gain after Indexation

50.09 lakhs (1 crore - 20 lakhs *(272/109)

Tax

10.01 lakhs (20% of 50.09 lakhs)

So instead of being liable for 20% of 80 lakhs (your capital gains in pure currency terms), you are actually liable for 20% of 50.09 lakhs which is INR 10.01 lakhs.

However, in case your asset was acquired prior to 2001-02 and was sold prior to April 1st, 2017, you will have to use the old CII table with 1981 as the base year to calculate your LTCG for that year.

Old Cost Inflation Index (from FY 1981-82 till FY 2016-17)

Financial Year

Assessment Year

CII Index

2016-17

2017-18

1125

2015-16

2016-17

1081

2014-15

2015-16

1024

2013-14

2014-15

939

2012-13

2013-14

852

2011-12

2012-13

785

2010-11

2011-12

711

2009-10

2010-11

632

2008-09

2009-10

582

2007-08

2008-09

551

2006-07

2007-08

519

2005-06

2006-07

497

2004-05

2005-06

480

2003-04

2004-05

463

2002-03

2003-04

447

2001-02

2002-03

426

2000-01

2001-02

406

1999-00

2000-01

389

1998-99

1999-00

351

1997-98

1998-99

331

1996-97

1997-98

305

1995-96

1996-97

281

1994-95

1995-96

259

1993-94

1994-95

244

1992-93

1993-94

223

1991-92

1992-93

199

1990-91

1991-92

182

1989-90

1990-91

172

1988-89

1989-90

161

1987-88

1988-89

150

1986-87

1987-88

140

1985-86

1986-87

133

1984-85

1985-86

125

1983-84

1984-85

116

1982-83

1983-84

109

1981-82

1982-83

100

The table above is only useful if your sale was made in FY 2016-17 (or prior).

By the way, this change in the base year is actually beneficial for all those who acquired their properties long back as they can now consider the fair market value of their properties in FY 2001-02 as their cost of acquisition.


This reduces your tax outgo as price of properties during 1981-2001 rose almost 10 times compared to 4 times increase in CII Index.

Capital Gains Calculator

Frequently Asked Questions

How to calculate the fair value of an asset acquired prior to 2001-02?

You will have to get a fair market value of your asset as of FY 2001-02.

You can refer to the value of similar properties that were sold in 2001-02 but often the best way is hire a Government approved valuer.

You can find a list of approved valuers for immovable property on Income Tax's website by clicking here

Do I have to use indexation compulsorily?

Yes, now it is compulsory.

Earlier it was possible to choose between a 10% tax without indexation or a 20% tax after indexation. Government of India has done away with 10% option and now only 20% tax post indexation applies.

Can indexation result in a capital loss?

Yes, there can be a negative capital gain after indexation even if your purchase price is lower than your sales price in currency terms.

This will be considered like a capital loss and can be set off against gains of that specific year. If you can't set it off in the same year, report it in your income tax return and you can carry it forward for next 8 years.

What all assets are eligible for indexation benefits?

Not all assets are eligible for indexation benefits.

Your debt mutual funds, real estate, unlisted shares, gold and fixed maturity plans are eligible for indexation benefits.

Fixed deposits, recurring deposits, Post Office Monthly income schemes, NSCs or interest on savings bank account is not eligible.

Shares of listed companies and Equity Mutual funds are not subject to any long term capital gains taxation (i.e. if held more than 12 months) so Indexation is not relevant for them.

When will CII be notified by the Government?

CII is notified by CBDT once a year. Notification declaring same typically comes out in June of each year. The CII for 2017-18 is 272.

How's CII actually calculated? What formula does CBDT use?

As per Income Tax Act's section 48, CII is calculated by taking 75% of average rise in the consumer price index (CPI) for the urban non-manual employees in the immediately preceding year.

In simpler words, CII will increase by 75% of actual inflation % during the last financial year.

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