Cost Inflation Index for financial year 2013-14 -

Cost Inflation Index for financial year 2013-14:

COST INFLATION INDEX FOR FINANCIAL YEAR 2013-14:

Under the Income Tax Act (‘ITA’), capital gains on transfer of an asset are computed by determining the difference between the full value of consideration and cost of acquisition and improvement. In case where the asset is considered as a long term capital asset as per the definition under the ITA, instead of the actual cost, the indexed cost of acquisition / improvement has to be taken into consideration. Indexed cost of acquisition / improvement is to be computed by multiplying the cost with the Cost Inflation Index (CII) for the year in which the asset is sold and divided by the CII for the year in which the asset was acquired / improved. In such cases, the difference between indexed cost and the full value of consideration shall be considered as long term capital gains chargeable to tax.

CII is notified by the Central Government every year in its official gazette.

For financial year 2013-14, the Government has recently notified the CII to be 939. Thus while determining the long term capital gains on the transfer of any long term capital asset effected at any time during the financial year 2013-14 relevant to the assessment year 2014-15, indexed cost of acquisition and indexed cost of improvement has to be calculated as follows:

Indexed cost of acquisition / = Cost of acquisition/ * 939

improvement improvement CII of year of acquisition/ improvement

The taxpayers can now use this CII for calculating their long term capital gains for A. Y. 2014-15 especially for the purpose of calculating and paying advance tax.

For the benefit of the tax payers, below is the list of CII since inception:

Financial Year	CII	Financial Year	CII
1981-82	100	1998-99	351
1982-83	109	1999-00	389
1983-84	116	2000-01	406
1984-85	125	2001-02	426
1985-86	133	2002-03	447
1986-87	140	2003-04	463
1987-88	150	2004-05	480
1988-89	161	2005-06	497
1989-90	172	2006-07	519
1990-91	182	2007-08	551
1991-92	199	2008-09	582
1992-93	223	2009-10	632
1993-94	244	2010-11	711
1994-95	259	2011-12	785
1995-96	281	2012-13	852
1996-97	305	2013-14	939
1997-98	331