The price of inflation index (CII) for the monetary 12 months 2021-22 has been notified by the Ministry of Finance. The ministry has set the Price Inflation Index FY 202-22 as 317. For the earlier FY 2020-21, CII worth was 301.
The speed of inflation for indexation functions is specified by the Indian Authorities for each monetary 12 months.
The bottom 12 months is taken into account as 2001-02.
The bottom 12 months was shifted from 1981 to 2001 in Finances 2017.
This CII quantity is essential as it’s used to reach on the inflation adjusted buying value of belongings (listed price of acquisition) which have been offered or deliberate to be offered in FY 2021-22.
The listed price of acquisition is used within the calculation of Lengthy-term capital positive aspects (LTCG) or Lengthy Time period Capital Losses (LTCL).
Kindly be aware that CII is used to calculate inflation-adjusted price just for these belongings the place inflation-adjusted (indexation profit) is allowed. For instance, within the instances of debt mutual funds, real-estate property, gold and many others.,
The CII worth can’t be used to reach at LTCG/LTCL on fairness mutual funds. Index profit is not allowed in case of bonds or debentures besides capital indexation bonds or sovereign gold bonds issued by the RBI.
Newest Price Inflation Index FY 2021-22 | CII Chart AY 2022-23
Beneath is the desk of Price Inflation Index numbers, as stipulated by the Revenue Tax Division. You’ll be able to take values from the desk to compute the listed or inflation-adjusted price of acquisition.
|Monetary Yr||Evaluation Yr||Price of Inflation Index (CII)|
|2001-02 (Base 12 months)||2002-03||100|
Easy methods to Calculate the Listed price of buy or listed price of Acquisition (ICoA)?
The listed price is calculated with the assistance of a desk of price inflation index as given above.
Divide the price at which you bought the Property/Funding by the index as on the date of the acquisition. Multiply this by the index as on the date of sale.
ICoA = Authentic price of acquisition * (CII of the 12 months of sale/CII of 12 months of buy)
Let’s say you will have invested in a debt fund in August 2014. Your funding quantity was Rs 2,00,000 (20,000 models @ Rs 10 every). Seven years later, you redeemed your investments in June 2021, at a price of Rs 3,00,000 ( 20,000 models @ Rs 15 every).
Therefore, whenever you offered your investments, the worth of your investments was Rs 3,00,000. Your funding made capital positive aspects value Rs 1,00,000. Nonetheless, you needn’t pay tax on this complete quantity of Rs 1,00,000.
All you might want to do is apply the system.
- Price of acquisition is Rs 2 lakh.
- CII quantity for buy 12 months (2014-15) was 240.
- CII throughout sale 12 months (FY 2021-22) is 317.
This might imply that your listed price value of acquisition can be –> (2,00,000 * 317/240) = Rs 2,64,167.
As once more, your Long run capital positive aspects would come all the way down to Rs. 35,833 (Rs 3,00,000- Rs.2,64,167), you’ll be taxed 20% of this quantity (as in comparison with Rs 1,00,000 with out indexation) which can once more, tremendously cut back your tax obligations.
Thus, with Indexation, you’ll be able to take pleasure in the advantages of your personal investments with out shedding an extreme quantity of taxes.
CII Index Worth for FY 2021-22 / AY 2022-23 | Notification
Beneath is the notification issued by the Ministry of Finance on Price Inflation Index for FY 2021-22.
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(Publish first revealed on 27-June-2021)