The price of inflation index (CII) for the monetary 12 months 2021-22 has been notified by means of the Ministry of Finance. The ministry has set the Value Inflation Index FY 202-22 as 317. For the former FY 2020-21, CII price used to be 301.

The velocity of inflation for indexation functions is laid out in the Indian Executive for each and every monetary 12 months.

The bottom 12 months is thought of as as 2001-02.

The bottom 12 months used to be shifted from 1981 to 2001 in Finances 2017.

This CII quantity is necessary as it’s used to reach on the inflation adjusted buying worth of belongings (listed value of acquisition) that have been offered or deliberate to be offered 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 the ones belongings the place inflation-adjusted (indexation receive advantages) is authorized. For instance, within the instances of debt mutual budget, real-estate assets, gold and so on.,

The CII price can’t be used to reach at LTCG/LTCL on fairness mutual budget.  Index receive advantages is now not allowed in case of bonds or debentures excluding capital indexation bonds or sovereign gold bonds issued by means of 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 means of the Source of revenue Tax Division. You’ll take values from the desk to compute the listed or inflation-adjusted value of acquisition.  

Easy methods to Calculate the Listed value of acquire 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 associated fee at which you bought the Belongings/Funding by means of the index as at the date of the acquisition. Multiply this by means of the index as at the date of sale.

ICoA = Unique value of acquisition * (CII of the 12 months of sale/CII of 12 months of acquire)

Let’s say you could have invested in a debt fund in August 2014. Your funding quantity used to be Rs 2,00,000 (20,000 devices @ Rs 10 every). Seven years later, you redeemed your investments in June 2021, at a worth of Rs 3,00,000 ( 20,000 devices @ Rs 15 every).

Therefore, while you offered your investments, the worth of your investments used to be Rs 3,00,000. Your funding made capital positive aspects price Rs 1,00,000. Then again, you want now not pay tax in this complete quantity of Rs 1,00,000.

All you want to do is follow the method.

• Value of acquisition is Rs 2 lakh.
• CII quantity for acquire 12 months (2014-15) used to be 240.
• CII all through sale 12 months (FY 2021-22) is 317.

This might imply that your listed value worth of acquisition could be –> (2,00,000 * 317/240) = Rs 2,64,167.

As once more, your Long run capital positive aspects would come right down to Rs. 35,833 (Rs 3,00,000- Rs.2,64,167), you’re going to be taxed 20% of this quantity (as in comparison to Rs 1,00,000 with out indexation) which is able to once more, a great deal scale back your tax responsibilities.

Thus, with Indexation, you’ll experience some great benefits of your individual investments with out shedding quite a lot of taxes.

CII Index Price for FY 2021-22 / AY 2022-23 | Notification

Beneath is the notification issued by means of the Ministry of Finance on Value Inflation Index for FY 2021-22.

Proceed studying:

1. What’s Adverse Actual Passion Charge? | How Can Passion Charges Be Adverse?
2. What’s Indexation of Mutual Budget and why is it necessary for you?
3. Record of all Common Funding Choices in India – Options & Snapshot
4. Easy methods to save Capital Good points Tax on Sale of Land / Area Belongings?

(Publish first revealed on 27-June-2021)