What’s the Value Inflation Index (CII) for FY 2024-25 (AY 2025-26)? CBDT notified Rs.363 because the Value of Inflation Index for FY 2024-25 (AY 2025-26) on Could 24, 2024.
The price of merchandise rises as time goes on, resulting in a lower within the shopping for energy of cash. As an example, if Rs 1,00,000 might buy two models of products at this time, tomorrow the identical quantity may solely be capable to purchase one unit as a consequence of inflation. The Value Inflation Index (CII) is utilized to calculate the escalation in costs of products and property yearly because of inflation.
Within the Finances 2017, the Authorities proposed a modification within the base 12 months for calculating the indexation profit. Beforehand, the bottom 12 months was set at 1981, however now it has been modified to 2001. It is very important notice that this modification applies to all asset lessons, however the affect will fluctuate relying on the property that take pleasure in indexation advantages for long-term capital beneficial properties, comparable to actual property, unlisted shares, gold, and bond funds.
Earlier than thirty first March 2017, the capital achieve was decided utilizing the acquisition worth based mostly on the honest market worth of 1981. This meant that for property bought earlier than 1st April 1981, the acquisition worth may very well be calculated utilizing the honest market worth of 1981. Nevertheless, ranging from 1st April 2017, the acquisition worth will likely be calculated utilizing the honest market worth of 2001. Consequently, capital beneficial properties on property acquired earlier than 1st April 2001 can even be calculated utilizing the honest market worth as of 2001.
What’s the Value Inflation Index (CII)?
It’s a metric for inflation utilized within the calculation of Lengthy Time period Capital Beneficial properties (LTCG) from the sale of capital property based on IT Part 48. This metric is asserted yearly for every Monetary Yr.
Due to this fact, the relevant CII price will correspond to the precise monetary 12 months in query. Calculating the LTCG is essential in figuring out a capital achieve, and the Value of Inflation Index (CII) is crucial for this goal. An instance can illustrate how the listed price of acquisition is computed utilizing the CII.
Listed Value of Acquisition=(Value of Acquisition/Value of Inflation Index (CII) for the 12 months by which the asset was first held by the assessee OR FY 2001-02, whichever is later)* Value of the Inflation Index (CII) for the 12 months by which the asset was bought or transferred.
Allow us to assume that you just 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 likely be as per the above formulation i.e.
Listed Value of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Lengthy Time period Capital Acquire=Promoting Value-Listed Value of shopping for property = Rs.33,76,069.
(Notice- As per the beneath Value of Inflation Index (CII), the CII price for FY 2017-18 is 272, and for FY 2005-06, it’s 117).
Nevertheless, neglecting the listed price would lead to an easy achieve of Rs.1 crore (Rs.1.5 crore – Rs.50 lakh). Nevertheless, in the case of taxation, the Lengthy-Time period Capital Beneficial properties (LTCG) on capital property will likely be calculated after adjusting the acquisition price for inflation utilizing the Value of Inflation Index (CII).
Value Inflation Index (CII) for FY 2024-25 (AY 2025-26)
Let me share with you the Value Inflation Index (CII) from FY 2001-02 to FY 2024-25.
Now allow us to see how this price of inflation index is rising 12 months on 12 months from the bottom 12 months to the newest FY 2024-25.
You seen that from final 12 months to this 12 months, the increment is round 4.3%. Hope this data will aid you in arriving at your capital achieve tax.