Price of Inflation Index for FY 2023-24 AY 2024-25

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Finance

What’s the CII or value of inflation Index for FY 2023-24? CBDT notified the Price of Inflation Index for FY 2023-24 AY 2024-25 for Capital Achieve on tenth April 2023. It’s possible you’ll remember that the bottom yr was modified from the sooner FY 1981-82 to FY 2001-02.

Change within the Base yr for Capital Achieve Indexation

In Funds 2017, the Authorities proposed to vary the bottom yr to calculate the indexation profit from 1981 to 2001. Do keep in mind that the change within the base yr is throughout all asset lessons however the impression would differ throughout property that take pleasure in indexation advantages on long-term capital beneficial properties—actual property, unlisted shares, gold, and bond funds. As much as thirty first March 2017, the capital achieve was calculated with 1981 as the bottom yr. Which means that the acquisition worth of an asset purchased earlier than 1 April 1981 might be calculated on the premise of the truthful market worth of 1981. Nevertheless, from 1st Apr 2017, the acquisition worth will likely be calculated primarily based on the truthful market worth of 2001. Accordingly, capital beneficial properties on property acquired earlier than 1 April 2001 may even be calculated utilizing truthful market worth as of 2001.

What’s the Price of Inflation Index (CII)?

It is a measure of inflation that’s used for computing Lengthy Time period Capital Beneficial properties (LTCG) on the sale of capital property as per IT Part.48.

It’s introduced for every Monetary Yr however not primarily based on Evaluation Yr. Therefore, the relevant charge of CII will likely be for that specific monetary yr.

To reach at a capital achieve, it is rather a lot necessary to calculate the LTCG. For this objective Price of Inflation Index is a should.

Take an instance of how the listed value of acquisition will likely be calculated utilizing Price of Inflation Index or CII.

The method is as beneath.

Listed Price of Acquisition=(Price of Acquisition/Price of Inflation Index (CII) for the yr through which the asset was first held by the assessee OR FY 2001-02, whichever is later)* Price of the Inflation Index (CII) for the yr through which the asset was offered or transferred.

Allow us to assume that you simply bought the property in FY 2005-06 at Rs.50 lakh and offered the identical in FY 2017-18 at Rs.1.5 Cr. Now the listed value of acquisition will likely be as per the above method i.e.

Listed Price of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Lengthy Time period Capital Achieve=Promoting Value-Listed Price of shopping for property=Rs.33,76,069.

(Observe-As per the beneath Price of Inflation Index (CII), the CII charge for FY 2017-18 is 272 and for FY 2005-06, it’s 117).

Nevertheless, if you don’t think about the listed value, then in plain the achieve could also be stated as Rs.1 Cr lakh (Rs.1.5 Cr-Rs.50 Lakh). However within the case of taxation, the LTCG on capital property will likely be after adjusting the price of shopping for to inflation or the Price of Inflation Index (CII).