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Cost inflation index (CII) UPSC NOTE


  • The Cost Inflation Index (CII) is used by taxpayers to compute gains arising out of sale of capital assets after adjusting inflation

  • The index is useful to adjust the capital gains for inflation so that the taxpayers are taxed on real appreciation of the assets and not the gains due to inflation. 

  • With the help of indexation, one can lower her/his long-term capital gains, bringing down the taxable income

  • Taxpayers can use this to calculate gains for the long-term capital assets sold during FY24-25 and reduce the tax liability accordingly

  • Central Board of Direct Taxes (CBDT) notifies cost inflation index (CII) for 2024-25 at 363, a 4.3% rise from FY24’s 348

  • Tax liability on the sale or transfer of any capital asset, such as land, property, trademarks and patents expected to be lower this year as a result of the reset of the CII

  • The indexation was in news last year as the Finance Act, 2023 removed this for debt mutual funds. 

  • April 1 onwards, gains for funds are taxed at the investor’s tax slab rate, rather than the previous 20% with indexation benefit and 10% without that. 



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Cost inflation index (CII) UPSC NOTE
Cost inflation index (CII) UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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