Cost Inflation Index: The Central Board of Direct Taxes (CBDT) has released the Cost Inflation Index. A new issue is released every year by CBDT. It has been increased to 376 for the financial year 2026. Earlier it was 363 in the financial year 2025.
Cost Inflation Index: If you are planning to sell land, house or long-held shares this year, then you may encounter the term Cost Inflation Index (CII) while calculating your capital gains. In this case, the government has given a big relief to the taxpayers. The Central Board of Direct Taxes (CBDT) has released the Cost Inflation Index. A new issue is released every year by CBDT. It has been increased to 376 for FY 2026. Earlier it was 363 in FY 2024-2025. This can help taxpayers reduce their LTCG tax burden.
The Cost Inflation Index is very useful. If you are thinking of earning profit by selling long term investments like land, house, bonds or gold, then this index is needed to calculate how much long term capital gain tax will have to be paid. With the use of the index, there is also a hope of reducing the tax burden on them. This new index will come into effect from 1 April 2026.
Know what is Cost Inflation Index
CII is a standard with the help of which the purchase price of an asset is adjusted according to inflation. It is released every year. When you buy a property a long time ago. If you sell it after years, then its price also increases due to inflation. In such a situation, CII is used to find out how much actual profit was made. With the help of this index, you can adjust the cost of your purchased property according to the current prices. Due to which your long term capital gain i.e. profit is reduced and tax has to be paid less.
What do last year’s figures say
The CII for the current financial year i.e. 2025-26 is 376, while it was 363 in 2024-25 and 348 in 2023-24. This shows that the index has been increased every year keeping inflation in mind. This index not only helps investors in tax planning but also promotes long term investment.
Why is CII used?
The purpose of using this index is that capital gains tax should be levied only on real profits. Capital gains tax should not be levied on gains affected by inflation. However, all the rules related to indexation have changed. Under the new rules changed after July 2024, most properties will no longer get the benefit of this indexation. But this benefit will still be available on residential house property. Provided the property was purchased before 22 July 2024 and is being sold on or after 23 July 2024. In such cases, you can choose either of the old or new tax rules.
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