CII For FY 2025-26: The Secret Number to Shrink Your Capital Gains Tax Fast

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

• Capital gains Taxpayers who have sold long-term assets are waiting the Cost Inflation Index (CII) for FY 2025-26 (AY 2026-27).

• The first advance tax due date is 15th June 2025 which is approaching fast.

• No CII which means no clarity on long-term capital gain computation.

• Generally the CII is notified by CBDT around April-May each year.

• FY 2024-25 CII = 363 was notified in 24th May 2024

• As of early June 2025, still pending.

Relevance of CII

CII is useful in determining the long-term capital gains on the sale of property by accounting for inflation. By applying the CII, taxpayers can reduce their taxable capital gains, reflecting a more accurate, inflation-adjusted profit.

Types of Assets Eligible for CII Adjustment

The Cost Inflation Index (CII) is applicable to certain types of assets, like:

• Land and Building
• Property
• Unlisted Shares
• Debt Mutual Funds

The Cost Inflation Indexation benefit is not applicable to:

• Listed Equity Shares
• Equity Mutual Funds

Cost Inflation Index Table Upto FY 2024-25

Financial Year	Cost Inflation Indexation (CII)
2001-02	100
2002-03	105
2003-04	109
2004-05	113
2005-06	117
2006-07	122
2007-08	129
2008-09	137
2009-10	148
2010-11	167
2011-12	184
2012-13	200
2013-14	220
2014-15	240
2015-16	254
2016-17	264
2017-18	272
2018-19	280
2019-20	289
2020-21	301
2021-22	317
2022-23	331
2023-24	348
2024-25	363

How Indexation Applied for Long-Term Capital Assets?

Indexation for long-term capital assets helps in adjusting the purchase price of the asset using the Cost Inflation Index (CII) to account for inflation, thereby reducing the taxable capital gain. This method is not applicable for short-term capital gains. The formulas are:

Indexed Cost of Asset Acquisition = (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 Indexed Cost of Asset Improvement = (CII for the year of asset transfer x Cost of asset improvement) / CII for the year of asset improvement.

How to Calculate Capital Gain using CII?

Amit purchase a house in FY 2001-02 for Rs 10 Lakh. He sells the same in FY 2017-18 for Rs 40Lakh. What will be the indexed cost of acquisition?

Solution :

Here, CII for year 2001-02 is 100 CII for year 2017-18 is 272 The indexed cost of acquisition = 10,00,000 * 272/100 = 27,20,000 Capital Gain is 12,80,000 (40,00,000 – 27,20,000)

What is the Base Year Concept?

The “Base Year Concept” in the context of CII is used for calculating inflation-adjusted values of assets for taxation purposes.
For calculation purposes, the index value is set to 100 for the base year (2001-2002).
If an asset acquired before (2001-2002), its acquisition cost for tax purposes is determined as the higher of two values:

• The actual cost of acquisition.
• The Fair Market Value (FMV) of the asset as of 1st April 2001.

New Tax Regime For FY 24-25 Click Here

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