The Central Board of Direct Taxes (CBDT) has specified a value for the cost inflation index (CII) for 2014-15. A cost inflation index helps reduce the inflationary gains, thereby reducing the long-term capital gains tax payout for a taxpayer.
Last year, the index was ‘939’, and this year it is ‘1024’.
This would mean that there has been a 9.05 per cent rise in the cost inflation index for 2014-15.
The index is useful for income-tax assessees in the computation of tax on long-term capital gains (for indexation purposes).
In the previous year (2013-14), the cost inflation index increased 10.2 per cent.
Currently, the income-tax law allows long-term capital gains to be computed after adjusting for inflation.
The cost of acquisition as well as the cost of improvement is adjusted for inflation between the date of purchase and date of sale (through the cost inflation index) before the long-term capital gain is ascertained.
Visit here to Cost Inflation index for previous years
– NOTIFIED COST INFLATION INDEX FOR FINANCIAL YEAR 2014-15 NOTIFICATION NO. 31/2014 [F. NO. 142/3/2014-TPL], DATED 11-6-2014 In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (42 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:—
- In the said notification, in the Table, after serial number 33 and the entries relating thereto, the following serial number and entries shall be inserted, namely:—
|Sl. No.||Financial Year||Cost Inflation Index|