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How to use the Cost Inflation Index (CII): latest value and historical rates

This article lists the latest as well as historical Cost Inflation Index (CII) values and shows you how to use CII for calculating capital gains tax.

How to use the Cost Inflation Index (CII): latest value and historical rates


Posted on 29 Jun 2022
Author: Sayan Sircar
6 mins read
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This article lists the latest as well as historical Cost Inflation Index (CII) values and shows you how to use CII for calculating capital gains tax.

How to use the Cost Inflation Index (CII): latest value and historical rates

Originally published: 29-Jun-2022

Updated: 13-Apr-2023 - updated with CII for 2023-24

📚 Topics covered:

Understanding the Cost Inflation Index

The Cost Inflation Index (CII) is a number published by the Central Board of Direct Taxes (CBDT) for every financial year that is used to calculate capital gains on selling a capital asset like real estate, mutual funds, stocks or bonds.

The CII figure is published at the beginning of every financial year. It is used to rebase the purchase price of a capital asset, utilising the concept of indexation.

The CII figure may be taken as a proxy for inflation.

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What is the latest value of the Cost Inflation Index (CII)?

The Cost Inflation Index (CII) for FY 2023-24 (AY 2024-25) is 348. The index has increased by 5.14%.

Older CII values, to be used for assets purchased before 2001, are here: What are the historical Cost Inflation Index (CII) values since 1981?.

Historical Cost Inflation Index (CII) table

Serial # Financial Year CII %ch
1 2001-02 100 0.00%
2 2002-03 105 5.00%
3 2003-04 109 3.81%
4 2004-05 113 3.67%
5 2005-06 117 3.54%
6 2006-07 122 4.27%
7 2007-08 129 5.74%
8 2008-09 137 6.20%
9 2009-10 148 8.03%
10 2010-11 167 12.84%
11 2011-12 184 10.18%
12 2012-13 200 8.70%
13 2013-14 220 10.00%
14 2014-15 240 9.09%
15 2015-16 254 5.83%
16 2016-17 264 3.94%
17 2017-18 272 3.03%
18 2018-19 280 2.94%
19 2019-20 289 3.21%
20 2020-21 301 4.15%
21 2021-22 317 5.32%
22 2022-23 331 4.42%
23 2023-24 348 5.14%

Download as CSV

Related:
What are the historical Cost Inflation Index (CII) values since 1981?

Using the CII for calculating capital gains

The second column of the table has the financial year, which runs from 1st April to 31st March. The sale or purchase date of the asset is to be checked against this table, and the appropriate CII is to be picked up. For assets purchased before 1st April 2001, the seller has to use a government-approved valuer to determine the fair market price of the asset on 1st April 2001. In 2017, the government changed the base year for CII from 1981 to 2001.

We define the following terms:

  • the purchase price or book value (BV): the original price paid at the time of purchase
  • the sale price or market value (MV): the sale price of the asset
  • the cost of improvement of the asset (E): for house property, for example, this will be maintenance activities
  • CII in the financial year of purchase (CII0)
  • CII in the financial year of sale (CII1)

Indexed purchase price = BV * CII1 / CII0

Capital Gains = MV - E - Indexed purchase price

Since CII1 > CII0, Indexed purchase price > BV, meaning that the capital gains, and hence the capital gains tax you pay, is lower due to indexation.

(click to open in a new tab)
Indexed purchase price calculation using CII table

As the above table shows, it is easy to calculate the indexed purchase price. In the table above, an asset purchased in FY 2008-09 (CII = 137) and being sold in FY 2017-18 (CII = 272), will have an indexed purchase price of ₹198.54.

Related:
This article gives worked-out examples for calculating capital gains for mutual funds and real estate.

Using the CII to know if 20% tax rate with indexation is better than 10% without for stocks and mutual funds

For a long-term portfolio, it might be better to have assets that are taxed debt-type over equivalent portfolios that are taxed using the 10% without indexation rule.

Read more here: Which mutual fund has lower tax - international funds at 20 percent vs domestic at 10 percent?

List of assets on which CII is applicable

Here is an indicative list of assets for whose sale you need to use CII to calculate the capital gains tax:

  • debt, some hybrid, international and gold/silver mutual funds purchased before 1st April 2023 (read this article to understand the change regarding units purchased after 1st April 2023)
  • real estate
  • gold and gold jewelry

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This post titled How to use the Cost Inflation Index (CII): latest value and historical rates first appeared on 29 Jun 2022 at https://arthgyaan.com


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