How do you calculate the cost inflation index of a property ?
How do you calculate the cost inflation index of a property ?
Accroding to Income Tax Act 1961 setion 48 discussed about computation of capital gain.
There are two type of capital gain
1. Short term capital gain means capital gain arises on transfer of short term capital asset
2.Long term capital gain means capital gain arises on transfer of long term capital asset
The income chargeable under the head capital gain shall be computed as following
Computation of short- term capital gain
Full value of consideration
Less: a. Cost of acquisition
b. cost of improvement
c.Expenditure incurred
While in case of computation of long term capital gain we need to calculate indexed cost of acquation and Indexed cost of improvement are deducted from full value of consideration.
The cost of acquisition and cost of improvement are indexed on the basis of certain percentage of the consumner price index.
Indexed cost of acquisition means an amount which bears to the cost of acquisition the same proportion as cost of inflation index for the year in which the assest is transferred
S NO. | Financial Year | Cost Inflation Index |
1. | 2001-02 | 100 |
2. | 2002-03 | 105 |
3. | 2003-04 | 109 |
4. | 2004-05 | 113 |
5. | 2005-06 | 117 |
6. | 2006-07 | 122 |
7. | 2007-08 | 129 |
8. | 2008-09 | 137 |
9. | 2009-10 | 148 |
10. | 2010-11 | 167 |
11. | 2011-12 | 184 |
12. | 2012-13 | 200 |
13. | 2013-14 | 220 |
14. | 2014-15 | 240 |
15. | 2015-16 | 254 |
16. | 2016-17 | 264 |
17. | 2017-18 | 272 |
18. | 2018-19 | 280 |
19. | 2019-20 | 289 |
20. | 2020-21 | 301 |
Computation of cost of indexed cost of acquisition
I cost of acquisition* Cost of indexed of the year of transfer/ cost of indexed of the year of acquisition
Computation of cost of indexed cost of improvement
cost of improvement* Cost of indexed of the year of transfer/ cost of indexed of the year of improvement
Example
1. Y purchase a land on 4.12.2004 for Rs. 10,50,000. This land was sold by him on 8.2.2020 for Rs.40,00,000. compute the capital gain for the assessment 2020-21
Sale consideration Rs. 40,00,000
Less: Indexed cost of acquisition Rs.10,50000*289/113 Rs 26,85,398
Long term capital gain is Rs.13,14,602
2. Z purchase a land on 6.8.2008 for Rs. 7,90,000. This land was sold by him on 3.2.2021 for Rs.35,00,000. compute the capital gain for the assessment 2021-22
Sale consideration Rs. 35,00,000
Less: Indexed cost of acquisition Rs.7,90000*301/137 Rs 17,35,693
Long term capital gain is Rs.17,64,307
3. XZ purchase a land on 6.8.2010 for Rs. 11,60,000. This land was sold by him on 3.2.2021 for Rs.35,00,000. Expenses on transfer were 3% of sale price . compute the capital gain for the assessment 2021-22
Sale consideration Rs. 35,00,000
Less: Indexed cost of acquisition Rs.11,60,000*301/167 Rs 20,90,778
Expenses on transfer Rs. 1,05,000
Long term capital gain is Rs.13,04,222