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Cost Inflation Index (CII) is used to estimate the yearly increase in an asset’s price due to inflation. Indexation is a process by which the cost of acquisition is adjusted against inflationary rise in the value of asset. Recent Update On 1st July 2025, Central Board of Direct Taxes (CBDT
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The Cost Inflation Index (CII) for the Financial Year 2025-26 has been officially notified as 376 by the Central Board of Direct Taxes (CBDT).
CII is used to adjust the cost of an asset for inflation over time. This process, called indexation, helps reduce the taxable amount of long-term capital gains when an asset is sold.
The Cost Inflation Index (CII) adjustment is applicable to assets such as Land and Building Property, Unlisted Shares, and Debt Mutual Funds.
Yes, the Cost Inflation Indexation benefit is not applicable to Listed Equity Shares and Equity Mutual Funds.
The base year for CII is 2001-02, and the index value for this base year is set at 100.
The indexed cost of acquisition is calculated using the formula: (CII for the year of asset transfer x Cost of asset acquisition) / CII for the year of asset Purchase or year 2001-02, whichever comes later.
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