Cost Inflation Index: CII Income Tax

Calculating Long-Term Capital Gains (LTCG) with Indexed Cost of Acquisition and Indexed Cost of Improvement involves several steps. Let's break down the process: 1. Indexed Cost of Acquisition (ICA): Formula: ICA = Cost of Acquisition * (CII for the year of sale / CII for the year of purchase) Example 1: Cost of Acquisition: INR 50,00,000 CII for 2018-19: 280 CII for 2021-22: 317 ICA = 50,00,000 * (317/280) = INR 56,60,714

Example 2: Cost of Acquisition (using FMV as on 1.4.2001): INR 50,00,000 CII for 2014-15: 240 CII for 2001-02: 100 ICA = 50,00,000 * (240/100) = INR 1,20,00,000

Indexed Cost of Improvement (ICI): If improvements were made to the property, calculate ICI using the same formula as ICA. 3. Net Consideration: Deduct any transfer expenses from the Full Value of Consideration to get the Net Consideration.

Long-Term Capital Gains (LTCG): LTCG = Full Value of Consideration - Net Consideration - ICA - ICI By following these steps, taxpayers can accurately calculate their Long-Term Capital Gains with the benefit of indexation. This ensures compliance with tax regulations and optimizes tax liabilities.