Cost inflation index for LTCG tax stands 5.13% higher in FY24 YoY

The cost inflation index (CII), used to compute long-term capital gains on various asset classes for the purpose of taxation, will stand at 348 for the current financial year, 5.13 per cent higher than the previous year's.

The CII, notified by the income tax department, serves as the basis for calculating long-term capital gains on stocks, land, and real assets.  

Long-term capital gains tax kicks in for listed equities if the holding period is one year, while it is two years for non-financial assets such as real estate.

The base year of CII is 2001-02. This means that if a property purchased at Rs 1 lakh in 2001-02 is sold in 2023-24 its purchase value will be taken as Rs 3.48 lakh in 2023-24 and capital gains would be computed accordingly.

Usually, the income tax department notifies CII in June. However, the timely notification this time will help taxpayers calculate their advance taxes and pay to the government in time, said Rajat Mohan, senior partner at AMRG & Associates.

"This will assist taxpayers in calculating their tax liability in due course," said Om Rajpurohit, joint partner (Corporate and International Tax) with AMRG & Associates.

CII was also used for calculating long-term capital gains from non-equity mutual fund schemes -- debt mutual fund schemes, international equity mutual fund, gold mutual fund schemes etc. However, the indexation benefit on long-term capital gains from non-equity mutual fund schemes has been taken away from the current financial year.