FY 2026-27 CII = 348. Indexed cost = original × (CII sale yr / CII purchase yr). Pre-July 2024 properties: choose 20% indexed OR 12.5% un-indexed. Major LTCG saving on old assets.
CII = Cost Inflation Index. NOTIFIED ANNUALLY by Income Tax Department. Used to INDEX cost of acquisition for INFLATION when calculating LONG-TERM CAPITAL GAINS. PURPOSE: Tax only REAL gains, not inflationary gains. CURRENT CII (FY 2026-27): 348. RECENT VALUES: (FY 2020-21: 301), (FY 2021-22: 317), (FY 2022-23: 331), (FY 2023-24: 348), (FY 2024-25: probably 348-350). BASE YEAR 2001-02 = 100. APPLIES TO: property, unlisted shares, debt MF (pre-July 2024), gold, certain bonds.
INDEXATION FORMULA: INDEXED COST = COST OF ACQUISITION × (CII of SALE YEAR / CII of PURCHASE YEAR). EXAMPLE: Property bought 2010 for ₹50L. Sold 2026 for ₹2cr. CII 2010-11 = 167. CII 2026-27 = 348 (assumed). (a) Indexed cost: ₹50L × 348/167 = ₹1.04cr. (b) LTCG: ₹2cr - ₹1.04cr = ₹96L. (c) Without indexation: LTCG would be ₹1.5L. (d) BENEFIT: ₹54L lower taxable gain. (e) Tax: 20% × ₹96L = ₹19.2L (vs ₹30L without indexation).
POST-JULY 2024 BUDGET — MAJOR CHANGE: (1) INDEXATION REMOVED for property + unlisted shares: NEW rate 12.5% WITHOUT indexation (vs old 20% WITH indexation). (2) GRANDFATHERING: properties bought BEFORE July 23, 2024 — TAXPAYER CHOICE of OLD 20% with indexation OR NEW 12.5% without. (3) DEBT MUTUAL FUNDS: post-July 2024 — slab rate, NO indexation. (4) UNLISTED SHARES: 12.5% LTCG, no indexation. STRATEGIC: Pre-July 2024 property: calculate both ways + choose lower tax.
GRANDFATHERING (Section 54-AC + amendments): (1) PROPERTIES BOUGHT BEFORE July 23, 2024: SALE during transition — TAXPAYER CHOICE. (2) OLD RULE: 20% LTCG with indexation. (3) NEW RULE: 12.5% LTCG without indexation. (4) Choose LOWER tax. (5) EXAMPLE: Property cost ₹50L (2010), sold ₹2cr (2026). (a) Old: indexed cost ₹1.04cr, LTCG ₹96L, tax 20% = ₹19.2L. (b) New: LTCG ₹1.5cr, tax 12.5% = ₹18.75L. (c) NEW slightly better. (d) FOR HIGH-APPRECIATION properties (5x+ growth): new often better. (e) FOR LOW APPRECIATION: old may be better.
STRATEGY: (1) PRE-JULY 2024 PROPERTIES: calculate BOTH 20% indexed + 12.5% un-indexed. Choose lower. (2) POST-JULY 2024: simple 12.5% applies (no indexation). (3) SECTION 54: reinvest in new house — EXEMPT from LTCG. (4) SECTION 54EC: NHAI/REC bonds ₹50L cap — EXEMPT from LTCG. (5) SECTION 54F: ALL CAPITAL ASSETS sold + invest in house — EXEMPT. (6) CAGAS account: deferred reinvestment within 2-3 years. (7) UNLISTED SHARES: 12.5% LTCG, no indexation post-July 2024. (8) DEBT MF: NOT eligible for LTCG/indexation anymore. CONSULT CA for major capital gains events.