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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