Central Board Of Direct Taxes Releases Cost Inflation Index For FY 2023-24

The Income Tax Department has notified the Cost Inflation Index for current financial year beginning April 2023, which is used in computing long-term capital gains tax arising from sale of immovable property, securities and jewellery as per The Hindu report.

For the current fiscal 2023-24 the central board of direct taxes (CBDT) has shared the cost inflation index (CII), which is at 348, and is relevant to AY 2024-25. Usually, the Income Tax Department notifies CII in the month of June. The CII number for last financial year was 331 and for 2021-22 financial year it was 317.

This figure of CII is used by taxpayers to calculate gains arising after sale of capital assets post adjustment in inflation. It is notified under the Income-Tax Act, 1961 every year and is helpful to calculate "indexed cost of acquisition" while calculating capital gains at the time of sale of any capital asset.

For an asset sale to qualify as long term capital gains, on must retain it for more than 36 months (24 months for immovable property and unlisted shares, 12 months for listed securities) to qualify as 'long-term capital gains'.

As the prices of goods increase over time resulting in a reduction in the purchasing power, the CII is advantageous to derive at the inflation adjusted purchasing price of assets to compute taxable long-term capital gains (LTCG).