Cost Inflation Index

The existing provisions contained in section 48 prescribe the mode of computation of income chargeable under the head “Capital gains”. Clause (v) of the Explanation to the said section defines the term “Cost Inflation Index” (CII) which in relation to a previous year means such index as may be notified by the Government having regard to seventy-five percent of average rise in the Consumer Price Index (CPI) for urban non-manual employees (UNME) for the immediately preceding previous year to such previous year.

The release of CPI for UNME has been discontinued. Accordingly, it is proposed to amend the said clause (v) of the Explanation to section 48 to provide that “Cost Inflation Index” in relation to a previous year means such index as may be notified by the Central Government having regard to seventy-five percent of average rise in the Consumer Price Index (Urban) for the immediately preceding previous year to such previous year.

This amendment will take effect from 1st April, 2016 and will, accordingly, apply in relation to assessment year 2016-17 and subsequent assessment years.

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Tags : Budget (1957) Budget 2014 (172) indexation (32) inflation index (25)

0 responses to “Budget 2014 – Cost Inflation Index to be worked out on the basis of Index notified by Govt in this behalf”

  1. c k vasudevan says:

    Can someone put forward this in simple terms please so that Capital gains tax can be arrived at for a sale that is taking place this financial year viz. 2015-16 (A Y 2016-17)?

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