The price of inflation index (CII) for the monetary yr 2021-22 has been notified by the Ministry of Finance. The ministry has set the Value Inflation Index FY 202-22 as 317. For the earlier FY 2020-21, CII worth was 301.
The speed of inflation for indexation functions is specified by the Indian Authorities for each monetary yr.
The bottom yr is taken into account as 2001-02.
The bottom yr was shifted from 1981 to 2001 in Funds 2017.
This CII quantity is essential as it’s used to reach on the inflation adjusted buying worth of property (listed value of acquisition) which have been bought or deliberate to be bought in FY 2021-22.
The listed value of acquisition is used within the calculation of Lengthy-term capital positive aspects (LTCG) or Lengthy Time period Capital Losses (LTCL).
Kindly observe that CII is used to calculate inflation-adjusted value just for these property the place inflation-adjusted (indexation profit) is allowed. For instance, within the instances of debt mutual funds, real-estate property, gold and many others.,
The CII worth can’t be used to reach at LTCG/LTCL on fairness mutual funds. Index profit is not allowed in case of bonds or debentures besides capital indexation bonds or sovereign gold bonds issued by the RBI.
Newest Value Inflation Index FY 2021-22 | CII Chart AY 2022-23
Beneath is the desk of Value Inflation Index numbers, as stipulated by the Revenue Tax Division. You’ll be able to take values from the desk to compute the listed or inflation-adjusted value of acquisition.
|Monetary Yr||Evaluation Yr||Value of Inflation Index (CII)|
|2001-02 (Base yr)||2002-03||100|
Calculate the Listed value of buy or listed value of Acquisition (ICoA)?
The listed value is calculated with the assistance of a desk of value inflation index as given above.
Divide the price at which you bought the Property/Funding by the index as on the date of the acquisition. Multiply this by the index as on the date of sale.
ICoA = Authentic value of acquisition * (CII of the yr of sale/CII of yr of buy)
Let’s say you will have invested in a debt fund in August 2014. Your funding quantity was Rs 2,00,000 (20,000 models @ Rs 10 every). Seven years later, you redeemed your investments in June 2021, at a worth of Rs 3,00,000 ( 20,000 models @ Rs 15 every).
Therefore, while you bought your investments, the worth of your investments was Rs 3,00,000. Your funding made capital positive aspects price Rs 1,00,000. Nevertheless, you needn’t pay tax on this complete quantity of Rs 1,00,000.
All it is advisable to do is apply the formulation.
- Value of acquisition is Rs 2 lakh.
- CII quantity for buy yr (2014-15) was 240.
- CII throughout sale yr (FY 2021-22) is 317.
This might imply that your listed value worth of acquisition can be –> (2,00,000 * 317/240) = Rs 2,64,167.
As once more, your Long run capital positive aspects would come all the way down to Rs. 35,833 (Rs 3,00,000- Rs.2,64,167), you may be taxed 20% of this quantity (as in comparison with Rs 1,00,000 with out indexation) which can once more, enormously scale back your tax obligations.
Thus, with Indexation, you may get pleasure from the advantages of your individual investments with out shedding an extreme quantity of taxes.
CII Index Worth for FY 2021-22 / AY 2022-23 | Notification
Beneath is the notification issued by the Ministry of Finance on Value Inflation Index for FY 2021-22.
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(Publish first revealed on 27-June-2021)