Cost Inflation Index (CII) For FY 2022-23:
The Central Board of Direct Taxes (CBDT) notified the cost inflation index (CII) for FY 2022-23 via a notification dated June 14, 2022. The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331. For the previous year, i.e., FY 2021-22, CII was notified as 317.
- The CII is an index that is used to calculate the inflation-adjusted rise in the value of an asset including land, buildings, houses, gold jewellery, debt mutual funds, and so on.
- This CII number will assist you determine the long-term capital gains on which you are required to pay taxes when you file your income tax returns (ITR) next year.
- This number will be used to calculate inflation-adjusted cost for only those assets that allow for inflation-adjusted (indexation benefit).
- As a result, the CII value cannot be used to calculate LTCG/LTCL on equity mutual funds because any sum above Rs 1 lakh each fiscal year is taxed at a flat rate of 10% without the advantage of indexation.
- The formula to calculate inflation-adjusted cost price is: (CII of the year of sale/CII for the year of purchase) Actual cost price.
- The government declared in Budget 2017 that the base year would be changed from 1981 to 2001 due to challenges in obtaining appropriate information by taxpayers.
- In the case of an asset purchased prior to April 1, 2001, the cost of the asset is regarded as the fair market value on April 1, 2001.