The Central Board of Direct Taxes has notified the Cost Inflation Index (CII) as “376” Financial Year 2025-26 on 1st July 2025 vide notification no. 70/2025.
What is CII?
Cost Inflation Index is a tool which is used to calculate the indexed cost of acquisition or indexed cost of improvement in the case of long term capital assets.
Important Terms as defined in section 48 of the Income Tax Act
“indexed cost of acquisition” means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 2001, whichever is later;
“indexed cost of any improvement” means an amount which bears to the cost of improvement the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the year in which the improvement to the asset took place;
“Cost Inflation Index”, in relation to a previous year, means such Index as the Central Government may, having regard to seventy-five per cent of average rise in the Consumer Price Index (urban) for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify, in this behalf.
CII Table from F.Y 2001-02 to F.Y 2025-26
| Financial Year | Cost Inflation Index |
|---|---|
| 2001 – 02 | 100 |
| 2002 – 03 | 105 |
| 2003 – 04 | 109 |
| 2004 – 05 | 113 |
| 2005 – 06 | 117 |
| 2006 – 07 | 122 |
| 2007 – 08 | 129 |
| 2008 – 09 | 137 |
| 2009 – 10 | 148 |
| 2010 – 11 | 167 |
| 2011 – 12 | 184 |
| 2012 – 13 | 200 |
| 2013 – 14 | 220 |
| 2014 – 15 | 240 |
| 2015 – 16 | 254 |
| 2016 – 17 | 264 |
| 2017 – 18 | 272 |
| 2018 – 19 | 280 |
| 2019 – 20 | 289 |
| 2020 – 21 | 301 |
| 2021 – 22 | 317 |
| 2022 – 23 | 331 |
| 2023 – 24 | 348 |
| 2024 – 25 | 363 |
| 2025 – 26 | 376 |
How to calculate Indexed cost using CII
The formula to calculate Indexed Cost of Acquisition is as under:
The formula to calculate Indexed Cost of Improvement is as under:
Example
Example 1 : Sale of Property
Asset Purchased : Residential Property
Year of Purchase : 2011 – 12
Year of Sale : 2023 – 24
CII for 2011 – 12 : 184
CII for 2023 – 24 : 348
Purchase Price : ₹25,00,000
Indexed Cost of Acquisition = (₹25,00,000 x 348) ÷ 184 = ₹ 47,28,260/-
Example 2 : Sale of Jewellery
Asset Purchased : Jewellery
Year of Purchase : 2015 – 16
Year of Sale : 2023 – 24
CII for 2015 – 16 : 254
CII for 2023 – 24 : 348
Purchase Price : ₹4,00,000
Indexed Cost of Acquisition = (₹4,00,000 x 348) ÷ 254 = ₹ 5,48,031/-
Note :
Indexation Benefit is not available to any asset from 23rd July 2024. However in case of transfer of land or building or both acquired before 23rd July 2024, taxpayers have the option to pay tax either at 12.50% without indexation benefits or at the rate of 20% with indexation benefits. For land and building acquired after 23rd July 2024, the indexation benefits will not be available and the tax on Long Term capital gain will be payable at 12.50%.
The CII is less relevant than before due to the removal of indexation benefits for most assets, but it retains significance in specific scenarios, particularly for pre-2001 assets and certain debt mutual funds. Taxpayers with such assets should continue to monitor the CII (published annually by the government) for applicable cases. For broader tax planning, consulting a tax professional is advisable to navigate the new regime and any future amendments.
The official notification is as under :
notification-70-2025Stay Tuned to TaxRoutine.com for more updates.
