New Cost Inflation Index (CII) from FY 2001-02 to 2018-19 for determining LTCG

New Cost Inflation Index (CII) for determining Long Term Capital Gains (LTCG) under Income Tax, as notified by CBDT for FY 2001-02 to 2018-19

CBDT has notified new Cost Inflation Index (CII) for Financial Year (FY) 2018-19/ Assessment Year (AY) 2019-20 at 280 for determining LTCG under Income Tax. Earlier, CBDT has notified new Cost Inflation Index (CII) at 272 for FY 2017-18 (with CII at 100 for new Base Year 2001-02) as per amendments made by the Finance Act, 2017.

It may be noted that the Finance Act 2017 has amended provisions relating to indexation for determining long term capital gains (LTCG). The Base year has been shifted from FY 1981-82 to FY 2001-02. The assessees can now exercise option to use Fair Market Value (FMV)/ Indexed Cost of Acquisition for arriving at the figure of LTCG, regarding assets acquired prior to 1 Apr. 2001.

New Cost Inflation Index notified by CBDT (base Year 2001-02) Applicable for FY 2001-02 to 2018-19

SI. No.Financial YearCost Inflation Index
12001-02100
22002-03105
32003-04109
42004-05113
52005-06117
62006-07122
72007-08129
82008-09137
92009-10148
102010-11167
112011-12184
122012-13200
132013-14220
142014-15240
152015-16254
162016-17264
172017-18272
182018-19280

New Cost Inflation Index for FY 2018-19/ AY 2019-20 at 280: CBDT Notification No. 26/2018 dt. 13 June 2018

New Cost Inflation Index for FY 2001-02 to FY 2017-18: CBDT Notification No. 44/2017 dt. 5 June 2017

Relevance of Cost Inflation Index?

In the case of transfer of short term capital asset, the amount of capital gains can be arrived at by deducting the cost of acquisition/ improvement from the sale consideration. However, in the case of transfer of long term capital asset, capital gains are determined by deducting indexed cost of acquisition/ improvement from the sale consideration.

Cost Inflation Index basically means the index notified by the Central Govt. with reference to average rise in the consumer price index, during the year immediately preceding the relevant previous year. However, indexed cost of acquisition is arrived at by multiplying the cost of acquisition with the change in cost inflation index since the year of acquisition or 1 April, 2001 whichever is later.

Accordingly, the Cost Inflation Index for FY 2018-19 (new CII) is useful for working out the long term capital gains (LTCG) during FY 2018-19, from transfer of long term capital asset, i.e. sale consideration minus indexed cost of acquisition/ improvement.

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