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Sep 19, 2013

Cost Inflation Index Table 2013 - 2014 - Updated

What is Cost Inflation Index(CII)?

It is a measure of inflation that finds application in tax law, when computing long-term capital gains on sale of assets. Section 48 of the Income-Tax Act defines the index as what is notified by the Central Government every year, having regard to 75 per cent of average rise in the consumer price index (CPI) for urban non-manual employees for the immediately preceding previous year.

Formula for computing indexed cost is (Index for the year of sale/ Index in the year of acquisition) x cost.
For example, if a property purchased in 1991-92 for Rs 10 lakh were to be sold now for Rs 40 lakh, indexed cost = (519/199) x 10 = Rs 26.08 lakh. And the long-term capital gains would be Rs 13.92, that is Rs 40 lakh minus Rs 26.08 lakh.
Cost of Inflation Index for Year 2013-2014 is 939. 
 
Cost Inflation Index Table
1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-00 389
2000-01 406
2001-02 426
2002-03 447
2003-04 463
2004-05 480
2005-06 497
2006-07 519
2007-08 551
2008-09 582
2009-10 632
2010-11 711
2011-12 785
2012-13 852
2013-14 939

 

Example: How to Calculate Index Cost of Asset

If a assess purchased a house for Rs 200000 on 25th December 1988 and sellout for Rs.1000000 on 20 the December 2012 the computation will be as follows :

Sale consideration: 1000000
Less Cost of Acquisition^ 945783
Capital gain: 54217
*200000/166*785 =945783
How to Get Capital Gain Tax Saving ?

Tax exemption
: Exemption under section 54 EC can be claimed only if you have made capital gains. As per the said section, the capital gains have to be invested in the bonds and the deduction its allowed to the extent of the amount invested.
Therefore, if you've made LTCG of, say, Rs. 30 lakh and invested it, the amount will be exempt from tax. But if you invest only a part, say Rs. 10 lakh, you will get an exemption only on Rs. 10 lakh; you will have to pay LTCG tax on the remaining Rs. 20 lakh.
However, to avail the exemption, the investment needs to be made within a specified period from the date of gains. "The investment has to be made within six months of occurrence of LTCG in order to be eligible to claim the exemption benefit under section 54 EC,".
Though you can invest a maximum of Rs. 50 lakh and that too within six months of the transfer of the asset, you can increase your benefit if your LTCG exceeds Rs. 50 lakh, the maximum investible permitted. "Say your LTCG of Rs. 1 crore arises in the month of January, you can invest the maximum amount of Rs. 50 lakh up to 31 March and can invest the remaining Rs. 50 lakh in April, since the limit is for investment per year, and not exemption per year."

Read:http://www.safeinvestonline.com/search/label/Capital%20Gain%20Bonds

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